Analysis of Constraints Faced by Startups in the Food Processing Industries in Tamilnadu, India

Abstract

Food processing sector is the transformation of raw agricultural products into food or one form of food into other forms. Food processing comprises many forms of processing foods starting from grinding grain to make raw flour to home cooking to complex industrial methods of food processing and it is used to make convenience foods. The Indian Food and Beverage Industry is evolving as a high-profit sector and contributes about 3 % of India's GDP with the value of two-thirds of the total retail market in India. The projected revenue in the food and beverage business segment is estimated to show a CAGR growth rate of 14.2 percent from the year 2020 to 2024. The study was carried out in June 2022 with the objective is to analyze the constraints faced by startups in the food processing industries, for this study 30 key informants were selected from each start-up food processing industry in three districts namely Trichy, Dindugal, and Coimbatore and all the three districts, the Key Informants was asked collectively to list the constraints faced by the start-up food processing industry through the participatory method. The Rank Based Quotient (RBQ) value for the insufficient connection between production and processing is 84.67 and ranked first among the infrastructure constraint which implies that lack of infrastructure godowns for storage and linkages with the traders. The delay in sanction of loans was the major constraint with RBQ of 76.67 and ranked first among the policy constraint. The delay in sanction of loans makes the new startups innovate the new products in the market, which bags their product diversification in the market. The tedious channels for financial transactions with an RBQ value of 59.33 and a high rate of interest for loans with an RBQ of 57.33. The lack of knowledge on Post-harvest technologies with an RBQ value of 70.67, shows the lack of training on the handling of new and improved post-harvest equipment for product diversification. In the marketing constraint, the challenges in identifying the specific market for the product was ranked first among the marketing constraint with an RBQ value of 77.33. The hindrance in the identification of specific market for their produce bags their profit, they forced to sale their produce in markets in which they will not able to get better remunerative for their produce. The Policy would seek to create a favorable environment for the Agri-preneurs to start Food Processing sectors through fiscal initiatives/interventions, which will facilitate the establishment of low-cost pre-cooling and cold chain units proximal to the agricultural farms. It also facilitates the establishment of cold storage units and sorting grading, and hi-tech packing facilities to reduce post-harvest wastages and improve the quality of products and the shelf life.