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Day 48 – Q 2.How can backward and forward linkages in food processing industry be beneficial for the economy? Substantiate by taking suitable examples.

2. How can backward and forward linkages in food processing industry be beneficial for the economy? Substantiate by taking suitable examples. 

खाद्य प्रसंस्करण उद्योग में अग्रणी और अनुसरणी श्रृंखला से अर्थव्यवस्था को क्या फायदे हो सकते हैं? उपयुक्त उदाहरण लेकर पुष्टि करें।


The Food Processing Industry is of enormous significance for India’s development because of the vital linkages and synergies that it promotes between the two pillars of the economy, namely Industry and Agriculture.


Effective and seamless backward and forward linkages in food processing industry plug gaps in supply chain in terms of availability of raw material and linkages with the market. With multiplier effects economy is likely to benefit in following ways

a)Drives rural economy by increasing consumption due to increased income, essential for sustaining economic growth.

  • Decrease in post-harvest wastage losses due to better technologies and improved logistics.
  • Farmers are benefited by better farm gate prices and lower risks due to contract farming.
  • Increase in employment generation in rural areas.
  • Promotes investment in rural infrastructure-power, transport.
  1. b) Exports:  India has huge production base. It ranks number 1 in total food production globally. With respect to specific commodity it ranks number 1 in the production of production of milk, bananas, guavas, papayas, ginger, okra, pulses & buffalo meat. Further, India ranks number 2 in the world in the production of green peas, potatoes, tea, tomato, sesame, inland fish production. It is the fifth largest egg producer in the world. However, India does not figure significantly in the world trade of food and food products. Food processing can provide boost to exports by  
  • Increasing value addition.
  • Hygiene and best practices.
  • Better compliance to food quality standards and thus expand market base.
  1. c) Stabilize food prices in the economy (food inflation). Consumers will be benefited with access to larger variety of products at reasonable prices.
  2. d) Helps in diversification of crops in agriculture and gives boost to allied enterprises poultry, dairying, fishing and horticulture. This will also help meet nutritional requirement in rural areas.
  3. e) Position India as the most preferred investment destination for the agribusiness and food processing given the huge domestic market India has.

Ex: Amul – cooperative movement

  • Benefited farmers through sustained income other than farming.
  • Value addition to procured milk.
  • Linked to market with retail outlets catering to demand of urban population.


Rising per-capita income, changing life styles and food preferences provide significant opportunities for the growth of FPI. Realising its potential and likely benefits government has come out with SAMPADA yojana.

Best answer: John Nash

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