Potential in Agribusiness - Fruit and Vegetable Processing Industry in India

Author: Goyal, S.K.

Source: Journal of International Farm Management, Volume 3, Number 2, January 2006 , pp. 15-29(15)

Publisher: Institute of Agricultural Management

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Abstract:

India is the second largest producer of fruit and vegetables in the world. But, around only 2 percent of fruit and vegetable production is processed. This paper reports the consumption of fruit and vegetables in India and the status, growth and potential for fruit and vegetable processing. Production of fruit and vegetables grew at an annual rate of 4.35 and 5.74 percent, respectively during 1992-2002. Consumers' expenditure on fruit and vegetables has been rising over the years in India. Consumers' demand for fruit was more responsive than was the demand for vegetables to increased income. The study found that the number of processing units has grown by about 3.68 percent per annum during 1992-2003. Capacity utilization was about 37 percent in 1992, which has now increased to about 47 percent. Because of low capacity and poor capacity utilization, processing is at very low level. With regards to exports, there is a lack of processable varieties of fruit and vegetables. However, there has been tremendous growth (20.32 percent compound) in exports of processed fruit and vegetables particularly during the nineties following new economic policies, but India's share of world exports is very low. Among the various processed fruit and vegetable products exported, dried & preserved vegetables constituted the largest share (47 percent). Following economic liberalization, foreign direct investment in the processing sector has been increasing. India has the potential to become a leading exporter of processed fruit and vegetable products. To achieve this, there is a need to remove the constraints facing the industry. Globalization and liberalization have brought unprecedented challenges and severe competition to the processing industry. Firms must be innovative and need to anticipate and respond to the requirements of consumers for their survival and sustained growth. Only then one can hope to see the fruit and vegetable processing industry as a 'sunrise' industry.

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Keywords: FRUIT AND VEGETABLES; PROCESSING; INCOME ELASTICITY OF DEMAND; COMPOUND GROWTH RATE; INSTALLED CAPACITY; EXPORTS

Document Type: Research article

Publication date: 2006-01-01

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