siliconindia | | December 20189leading to a situation of extreme stress in the agricultural sector. There are around 13.6 crore farm cultivators across India. Annually, the average in-come earned by a cultivator is about Rs.44,000. Trends show that the in-come of a non-farm worker is three times of that of an average farmer. Further, as per a recent World Bank report, more than 50 percent of India's population is going to be urban by 2050. These factors are inducing more stress on the agricultural sector which is structurally becoming a non-viable livelihood option, especially when 70 percent of the cultivators are small and marginal ones having less than two hectare of land. On the contrary, the food & gro-cery market of India is currently val-ued at $380 billion and is estimated to grow to $500 billion by 2025, there-by indicating a clear growth in the processed food segment in India. We have already started to see large in-vestments in this sector. According to Department of Industrial Policy and Promotion (DIPP), the food pro-cessing sector has received invest-ments worth $8.37 billion in the years 2000-2017. The demand for processed food has been increasing in India. The consumption habits of consumers have changed and they are increas-ingly looking at convenient & safer food options. However, there is a de-mand-supply mismatch. Currently, the organized processed food indus-try is able to meet only 50 percent of the demand. In this scenario, micro and small entrepreneurs could play a key role in bridging the gap in the food industry. These homegrown local entrepreneurs thrive on local resources, have inno-vative business ideas, work on the thin line of organized and unorganized sec-tor and are being flexible in every as-pect of business. They can create and build markets which most organized businesses have overlooked. However, most startups in the pro-cessed food industry have to pass sev-eral tests and be viable in a highly cost competitive space. Currently, there are many government schemes to pro-mote entrepreneurship/startups in the country. But we need to look beyond just providing the seed capital to the entrepreneurs in the food industry. In short, a typical entrepreneur in the food sector is a person who has figured-out a business opportunity, has a brilliant concept or a product which looks promising, but has to go through the grind in order to be-come a successful entrepreneur. An entrepreneur's journey is not a smooth ride in the park. At every stage of his/her venture he/she has to face hur-dles, deception and constraints. For food industry, it starts with the cycli-cal nature of the agricultural produce itself leading to a greater challenge of the year round business continuity and utilization of facilities. Most en-trepreneurs get meaningful business from 6-9 months in a year with 3-4 months of non-operating period. This makes them less viable than a manu-facturing industry entrepreneur. This also includes high working capital stress to procure raw material which is available only for 3-4 months in a year. The Government is working to formulate the concept of the Farmer Producer Organization (FPO) in a bid to migrate the farming com-munity to a commercial enterprise. These FPO's are practically group of farmers turned entrepreneurs. Concep-tually, it's a great idea to move farmers up the value chain to increase the net realizations. However, when it comes to practice, the first hurdle our entre-preneurs face is the transformation from a producer to a business-orient-ed unit. This requires a great amount of capacity development to get fa-miliar to the way of operation as a business enterprise. Another key aspect impacting the entrepreneurs is the access to finance. Most individuals or FPOs have limit-ed share capital and low or no owned asset which makes them high risk tar-get for banks to fund. Currently, there are government schemes to support such startups, but access to bank fi-nance still remains a hurdle in the entrepreneur's life cycle. Coming to the operational aspects, the entrepre-neurs in the food industry need to have right technology to support their busi-ness model. Unlike medium and large firms, they do not have access to up-coming technologies and have limited capital for investments. Though the sector faces numer-ous constraints, the ecosystem needs to come together to support the new breed of young Indian entrepreneurs and help them succeed. They could be the key link between the decreas-ing viability of farm operations and increasing market demand of food industry. Though the sector faces numerous constraints, the ecosystem needs to come together to support the new breed of young Indian entrepreneurs and help them succeedAjay Kakra
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