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Challenges and Opportunities
in Food Processing Units in West Bengal – An Empirical Study |
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| Paper Id :
17677 Submission Date :
05/06/2023 Acceptance Date :
22/06/2023 Publication Date :
25/06/2023
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| Abstract |
Food processing industries play an important role in
employment generation and economic development in the state of West Bengal.But
the sector used to face many challenges related to raw materials, workers,
production, finance, marketing and government policy, etc. Instead of such barriers,
there are many opportunities also. The study has tried to highlight the major
constraints of the food product manufacturing units in West Bengal and also
explored the opportunities and offered suggestions concerning how to enhance
this industry in the future. |
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| Keywords | Food processing industry, Challenges, Opportunities, Expansion, Production | ||||||||||||||||
| Introduction | The role of the 'Green Revolution' in the development of
Indian agriculture is undeniable. As a result of the improvement of
agriculture, the amount of crop production increased manifold. This excess
produce is wasted due to a lack of storage. Gradually the post-harvest loss
rate increased. The food processing industry has established linkages between
agriculture and industry (Venkatesh et al. 2017). The food processing industry
on the other hand helps in reducing post-harvest losses of agriculture and
preserves food for a longer period. This sector has gained importance in the
world as well as in India during the last decade. The role of this industry in
India's economy is very significant. This sector constituted 1.69% of the Gross
Value Added (GVA) of the country in 2019-20 and more than 7 million people are
engaged in both registered and un-registered food processing industries (MOFPI,
2022). Annual Survey of Industries (ASI) has categorised Indian food processing
industries into 9 broad categories i.e. (a) Processing and preserving of meat,
(b) Processing and preserving of fish, crustaceans and molluscs and products,
(c) Processing and preserving of fruits and vegetables, (d) Manufacture of
vegetables and animal oils and fats, ( e ) Manufacture of dairy products, (f)
Manufacture of grain mill products and starches and starch products, (g)
Manufacture of other food products, (h) Manufacture of prepared animal feeds
and (i) Manufacture of beverages. In this study, the researcher has considered only
the units of 'Manufacture of other food products', for analysis purpose. The
production units of this sub-category are involved in manufacture of bread,
biscuits, cakes, pastries, rusks, sugar (sucrose) from sugarcane, `gur', cocoa
products, grinding and processing of spices, chocolate and chocolate
confectionery, sugar confectionery, sweetmeats including dairy-based
sweetmeats, chewing gum, macaroni, noodles, couscous and similar farinaceous
products, papads, appalam and similar food products, other semi-processed,
processed or instant foods and also preserving in the sugar of fruit, nuts,
fruit peels and other parts of plants, processing and blending of tea including
the manufacture of instant tea, coffee curing, roasting, grinding blending,
etc. and manufacturing of coffee products, etc. Manufacture of other food
products units contributed Rs.1.10 lakh crore in GVA of the country in 2019-20.
In India, 10395 registered manufacturers of other food product units were in
2018-19, where 861785 persons were employed (Annual Survey of Industries,
2019). In West Bengal, there are 717 registered manufacturers of other food
product units, where 54562 persons were employed in 2018-19 (Annual Survey of
Industries, 2019). Manufacture of other food product units are contributing to
India's GVA as well as solving the unemployment problem of India and in West
Bengal. But at the same time, these units are facing many problems regarding
raw materials, workers, production, marketing and awareness-related issues
which have been addressed in this study. |
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| Aim of study |
The major objectives of the study are: 1. To examine the challenges faced by the registered units of
‘Manufacture of Other Food Products’ in West Bengal 2. To explore the opportunities of the registered units
‘Manufacture of Other Food Products’in West Bengal. |
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| Review of Literature | Dwivedi (2010)
conducted his study on the ‘Gur’ (Jaggery) industry of
Khusinagar district, to examine the cost and returns of the industry and to
identify the major barriers of the industry. He has found that Small
manufacturers are only able to make the bare minimal profit, but medium and big
production facilities are more profitable. He also concluded that if the
government could provide facilities for research and development, this company
might be able to export high-quality ‘Gur’. Rajeswari, Saranya & Ambika
(2017) conducted a study to identify the major issues faced by the tea
industry, and the causes of that issues and offered some suggestions. The major
issues are declining the price of tea, less production, conditions of the
climate, quality deterioration, pest problems, and low wages for labours. They
also offered some suggestions, which are to create awareness amongst the
farmers through training, enhancement of the quality of tea production,
organised the industry and create more awareness. Bhushan & Mishra (2018)
have conducted their study on challenges and opportunities in the spice
industry. The challenges that they pointed out are poor product quality,
competition, poor post-reap handling, insufficient quantities, and drying spice
on non-clean surfaces. They mentioned that the biggest strength of the Indian
spice industry is its national as well as international market demand. Raut
(2018) has observed that the bakery industry is lucrative, but many of the
businesses primarily traditional bakeries have closed, and those that are left
face fierce competition from larger bakery brands. Even the government's
financial aid programmes for bakeries are insufficient to help them thrive in
the market.Tewari and Naaz (2020) have identified low yield of sugarcane, short
crushing season, fluctuation in production, low rate of recovery, high cost of
production, the small size of mills, old machinery, high competition low per
capita consumption and imbalance in distribution as the major challenges of the
sugar industry. They also concluded that the sugar mills have been negatively
impacted by the centre’s arbitrary fair remunerative price, or FRP, fixation.
Arulmathy & Silvan (2021) have concluded that the majority of the study
region now consumes bakery items regularly and they have become necessities.
Selling bread goods has a lot of room for business expansion.They also
concluded that their biggest challenge comes from the market competition for
bakeries nowadays as well as societal needs for a variety of healthful foods.
The success of the bakery business in the study area would result from
effectively addressing these concerns and problems. |
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| Methodology | The study is both exploratory and empirical in nature. The
explorative part of the study is based on the existing literature on the
subject including books, journal articles, newspaper reports, and
research-based publications on food processing published in journals, published
theses, etc. The empirical analysis has been done based on primary data. Primary
data has been collected through field surveys. A total of 55 registered
‘Manufacture of Other Food Products’ units were selected for the survey.
Non-probabilistic convenience sampling techniques have been used in the
selection of the units. A structured questionnaire has been filled up through
direct interaction with the respondents, who were the owner of the units. The
SPSS software has been used in this study for analysing the data of the primary
survey. Simple percentages, pie charts, bar charts and categorical variable
tables have been used to present and interpret the data. Descriptive
statistical tools, Chi-Square Test have been conducted for interpreting the
data. |
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| Result and Discussion | The registered
‘Manufacture of Other Food Product' units are the second highest in number among
all registered food processing units in West Bengal. Pilot surveys and
literatures have revealed that these units are facing six types of challenges
i.e. raw materials, workers, production, finance, marketing and awareness and
availability of Government schemes. The responses of the units have been
discussed below. 5.1 Raw
Materials-Related Challenges Raw materials
for the manufacture of other food products are available in West Bengal as well
as imported from other states also. Quality and price of raw materials are the
main issues of concern to the respondents. Responses have been shown in
the table-1:
The majority of
the respondents i.e. 58.20% (32.70+25.50) % agreed that the quality of the raw
materials varies frequently. 78.10% of the respondents also replied that the
price of raw materials fluctuates widely in the market and 80% of the
respondents stated that middlemen influence the price of raw materials in the
market. 5.2
Workers-Related Challenges Workers
contribute to the main operational part of any manufacturing unit. In the
manufacture of other food product units both skilled and unskilled workers are
required. Workers have many problems like migration, training, availability,
etc. Table: 2 has shown the responses regarding the workers' related
challenges.
The majority of
the respondents i.e. 54.50% (25.40%+29.10%) replied that skilled workers are
not available for their units. But, 40% of the respondents answered that
skilled workers are available in their units. 60%
(32.73%+27.27%) of the respondents replied that their skilled workers never
received any formal training from any institution. Only 21.82% of the
respondents answered that skilled workers of their units. According to
61.80% (29.10%+32.70%) of respondents, workers could not produce export-quality
finished productsdue to a lack of proper training. Only 20% of the respondents
stated that their workers are trained enough to produce export quality finished
products. Workers
migration is a serious issue for 50.90% (29.10%+21.80%) of respondents. Only
32.70% units never faced workers migration-related issues. 5.3
Production-Related Challenges Product quality
and price depend on the production process of the manufacturing company which
is also found in food processing industries. In recent days, many new machines
with advanced technology have been invented in this field. Yet, some units
still follow traditional production processes as well as semi-modern machinery
for the production of food products.
From the
survey, it has been found that the majority 43 (78.18%) of the units followed
mixed production methods where products are made through both machine and
manual processes. 8 (14.55%) units followed the fully machine-made production
method and only 4 (7.27%) units followed the hand-made production method.
The majority of
the respondents i.e. 69.10 %( 36.36%+32.74%) accepted that they are not
satisfied with their production method and they could not produce export
quality finished food products with their present production process. The majority of
the respondents 63.64% (34.54%+29.10%) agreed that they can't meet the market
demand for finished food products due to their present production process. This
is a challenging issue for them to work with their present production process. 5.4
Finance-Related Challenges The entire
process of the business depends on the financial capabilities of the
industries. The owners of the units collect money for capital investment as
well as for working capital purposes. Sometimes they face challenges regarding
finance and as shown in Table-4:
The majority of
the respondents 54.60% (27.30%+27.30%) accepted that they have faced several
problems at the time of taking the loan and their applications were rejected by
commercial banks due to lack of documentation. But, 29.10% of the respondents
said that they didn't face any trouble getting a loan from commercial banks and
16.40% of the total surveyed respondents said that they couldn't say anything
regarding this because they never applied for the loan. The majority of
the respondents 50.90% (27.30%+23.60%) replied that their units suffering from
the inadequacy of the working capital problem and only 32.70% of the
respondent's units said that they have enough working capital to meet their
daily operational expenditure. 5.5
Marketing-Related Challenges To know the
customers' taste and need all the big companies used to conduct survey
programme throughout the year. Lack of research and development activity is
another problem for food processing units. Every food processing company have
to carry out research and development activity to sustain itself in the long
run in the market. Trade fairs or food fairs are organised by the government, local
authorities or private organisations all over the state at different times of
the year, especially in the winter season. These types of fairs bring
opportunities for food processing industries to introduce their products to
their target customers. Table-5 has shown the results of marketing-related
challenges.
The majority of
the surveyed units 58.18% (36.36%+21.82%) didn't carry out any research and
development activity to satisfy their customer need and they never go for
product diversification also. But 38.18% of the total surveyed units carried
out their research and development activities as per their customer demand and
produce new products and go for product diversification. The table has
shown that most of the respondents 70.90% of food processing units never
participated in any food fair or trade fair and hence they didn’t reply. 21.80%
(9.10% +12.70%) of surveyed units said that participation in food fairs or
trade fairs has no impact on their sale and only 7.30% (5.50% +1.80%) of
surveyed units replied that participation has some impact on sales.
From the above
pie chart, it can be said that only 18% of respondent units check the quality
of their finished products either in government laboratories or in private
laboratories. But 82% of the units do not check the quality of their products
in any laboratories. Finished food products should be checked in laboratories for
ensuring the quality of the finished products. The direct interaction with the
respondents reveals that there is a shortage of well-equipped laboratories in
West Bengal, so testing qualities is time taking and expensive. Building own
laboratories is another big problem because huge money is needed for that
purpose. 5.6 Problems
Related to Awareness and Availability of Government Schemes Government is
always helpful towards registered manufacturers of other food product units.
The government introduced several schemes for the units.But the actual benefits
of such schemes have been taken only by a few food processing units. These
related challenges have been shown in Table-6:
The majority of
the respondent units 61.80% (41.80%+20%) are unaware of the government schemes
available for food processing units. Only 27.30% of the units are aware of such
schemes. Most of the
respondents 63.70% (27.30% +36.40%) replied that they never received any
support from the government for their marketing and selling of finished products,
whereas only 14.50% of the respondents received government assistance. 5.7
Opportunities in Food Processing Industries in West Bengal West Bengal's
food processing units face numerous challenges that have already been covered.
These industries continue to thrive year after year despite several issues.
These opportunities of the food processing units are covered in Table-7:
65.40%
(38.20%+27.20%) of the respondents have replied that raw materials are
available in West Bengal for the whole year in enough quantitiesand only 25.50%
of respondents answered that their raw materials are not available in West
Bengal. The majority of
the respondents (45.50%) said that worker’s strike is not a serious issue in
their units. Only 16.30% of the total surveyed units faced problems regarding
worker strikes in their units. The majority of
the respondents (78.20%) stated that their products have huge demand in the
local market and only 16.30% of the respondents replied that their products
have not so huge demand in the market. The majority of
the respondents(51.00%) observed that foreign brands of food products have no
effect on their sales and no competition has increased due to the entry of
foreign companies in the food processing sector. Only 25.40% of the total
surveyed units have accepted that foreign brands have some effect on the sale
of their food products and competition also increased due to the entry of
foreign companies. According to
the majority (58.20%) of the respondents, they never faced any problem
regarding issues or renewal of licences from different departments of the
government of West Bengal. But 27.30% of the respondents faced some
difficulties regarding either issue or renewal of their licence. Results of the
Chi-Square Test Table: 8 The Hypothesis
of the Study
(Source: Compiled by the researcher) Hypothesis-1:The P value of the Pearson Chi-Square
statistic is 0.000, which is less than 0.05. So, the null hypothesis has been
not accepted and the alternative hypothesis has been accepted. Therefore, it
can be said that there is an association between fluctuation in the price of
raw materials and the role of the middleman in the determination of price. So,
it can be said that the price of raw materials is influenced by the middleman. Hypothesis-2: The p-value of the Pearson Chi-Square
statistic is 0.000, which is less than 0.05. So, the null hypothesis has been
not accepted and the alternative hypothesis has been accepted. Therefore, it
can be said that there is an association between workers' migration and the
availability of skilled workers. Skilled employees are insufficient in the
manufacture of other food product processing units due to worker migration
problems. Hypothesis-3: The p-value of the Pearson Chi-Square
statistic is 0.051, which is greater than 0.05. So, the null hypothesis has
been accepted and the alternative hypothesis has been not accepted. Therefore,
it can be said that there is no association between the demand for finished
food products in the local markets and the effect of foreign brands on Indian
food products. |
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| Conclusion |
Registered manufacturers of food products units are found in
huge numbers in West Bengal, where a large number of people are engaged. In
West Bengal, raw materials of these industries are available in huge quantities
but the quality and price vary and fluctuate. Middlemen's influence is found in
the price determination of raw materials. The problem of labour migration
arises in these industries due shortage of availability of skilled labour, but
labour strike is not a serious issue in this sector. The production process of
these units is unable to produce export-quality food products even can't meet
the local demand. Financial problems are very acute in these units. Lack of
marketing strategy and less participation is also responsible for the marketing
challenges of the units. Lack of awareness about the government schemes is also
a serious issue for the units. Despite many challenges, the manufacture of
other food product units in West Bengal is running successfully based on some
opportunities like sufficient local demand, cheap labour cost, availability of
raw materials and positive government initiatives. The industry has a huge
opportunity to explore in future. |
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| References | 1. Arulmathy, T.M., & Salvan, S.C.B.S.A. (2021).
Prospects and Problems in Marketing of Bakery Products in Madurai District.
ANVESAK, 51(1) (Vii), pp 107-109. 2. Bushan, P., & Mishra, S. (2018). Spice Industry in
India: Challenges & Opportunities. International Journal for Research in
Engineering Application & Management (IJREAM),4(6), pp 106-110. 3. Dwivedi, A. (2010). An Empirical Study on Gur (Jaggery)
Industry(with special reference to operational efficiency & profitability
measurement). Indian Institute of Management Ahmedabad,
India.http://ssrn.com/abstract=1783403 4. Ministry of Food Processing Industries (MoFPI). (2022). 2021-22
annual report. 5. Ministry of Statistics and Programme Implementation. (2019).
2018-19 annual survey of industries report. 6. Rajeswari, K., Saranya, R., & Ambika, V. (2017). Tea
Industry in India – Challenges Ahead. IRE Journals, 1(7), pp 39-41. 7. Raut, T. S. (2018). A Study of Bakery Business in the
State of Goa. Dnyanprassarak Mandal’s College and Research Centre, Assagao,
Goa, 5(2), pp 908-912. 8. Tewari, M., & Naaz, T. (2020). Indian Sugar Industry:
problems and Challenges. JETIR, 7(2), pp 740-746. www.jetir.org. 9. Venkatesh, P., Balasubramanian, M., Praveen, K.V., Aditya, K.S., Vijay Babu, D., Nithyashree, M.L. & Kar, A. (2017). Agro-Processing Industry and Farmers' Linkage: Pattern and Impact on Enhancing Farmers' Income in Tamil Nadu. Agricultural Economics Research Review, 30, 13-25. https://DOI: 10.5958/0974-0279.2017.00018.0. |
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