Prosperity, Youth Enterprise and Cultural Values in Peripheral Regions
Working Paper No 1
Agriculture & Agribusiness
Center for Development of Corporate Citizenship
S P Jain Institute of Management & Research Mumbai
Ladakh Autonomous Hill Development Council, Leh
Druk Pema Karpo Educational Society
in association with
This Working Paper was prepared as part of an 18-month project entitled
‘Enterprising Ladakh’. The Paper seeks to identify economic opportunities
available to Ladakhis – especially young Ladakhis - in local, national and
international markets. The findings will be discussed at a Workshop in Leh in
July 2005, with the objective of identifying economic activities that Ladakhis
themselves consider feasible, acceptable and appropriate within Ladakhi
society and values.
Subsequently, the project team will scope the skills and attributes required to
access the preferred market opportunities, while the final stage of the project
will outline a new school curriculum to impart enterprise-related skills and
motivation to young Ladakhis, alongside traditional teaching of cultural and
‘Enterprising Ladakh’ is a project being conducted by the Ladakh Autonomous
Hill Development Council (LAHDC), Leh, Druk Pema Karpo Educational Society
and Drukpa Trust, in association with SECMOL.
The findings set out in this Working Paper are the work of Ankush Sabharwal
and Atul Singh of the Center for Development of Corporate Citizenship, S P
Jain Institute of Management & Research, Mumbai. The work was carried out
under the supervision of Professor Jiban Mukhopadyay, Professor M. S. Rao
and Professor Nirja Mattoo (Chair of the Centre for Development of Corporate
You are kindly invited to communicate your views on this Working Paper to the
Hemis Complex, Zangsti
Leh, Ladakh -194 101
Phone: +91 94191 77536; 252 133
This document has been produced with the financial assistance of the
European Union. The contents of this document are the sole responsibility of
Ladakh Autonomous Hill Development Council, Druk Pema Karpo Educational
Society and Drukpa Trust, and can under no circumstances be regarded as
reflecting the position of the European Union.
TABLE OF CONTENTS
Executive Summary ........................................................................................... 4
1 Agriculture & Agribusiness: The Current Position............................................ 5
1.1 Agricultural Issues..................................................................................... 6
1.2 Comparative Advantage of Ladakh region................................................ 8
1.3 SWOT Analysis of Fruits........................................................................... 8
1.4 SWOT Analysis of Vegetables.................................................................. 9
1.5 SWOT Analysis of Grains & Cereals....................................................... 10
2.1 Linking the Vision with Strategy .............................................................. 11
2.2 Value Addition Analysis for Apricot Products (Oil and Dried Apricot)...... 12
2.3 Value Addition Analysis: Seabuckthorn .................................................. 13
2.4 Estimation of Capital Investments Required, and Profits from Small Scale
Processing Units........................................................................................... 15
2.5 Recommendations for Encouraging Entrepreneurship in Food Processing
3 An Approach to Bridging the Gaps in Agribusiness and Food Processing .... 20
3.1 Food Parks ............................................................................................. 20
3.2 Process of Setting up Clusters................................................................ 22
3.3 Marketing ................................................................................................ 25
3.4 Bridging the Education, Training and Information Gap ........................... 26
4 Organic Agriculture........................................................................................ 27
4.1 Identification of gaps ............................................................................... 27
4.2 Approaches to Bridging the Gaps in Organic Produce Certification and
Marketing ...................................................................................................... 28
ANNEXURES ................................................................................................... 30
Annexure I Demand by the Army.................................................................. 30
Annexure II Comparative Economics of Vegetables vs. Food Grains........... 31
Annexure III Guidelines For Setting Up Of Unit Under Fruit Products Order 32
Ladakhi Agricultural System - Present Status
Ladakhi agriculture is primarily subsistent in nature. Perhaps, as we obtained in
our field trips and from general observation, it is better to call it self-sufficient
and self-contained rather than subsistent. Ladakhis grow and consume their
own grains, cereals and vegetables, prepare their own manure, seeds and other
agricultural inputs, rear their own animals and prepare their own farms in a well
integrated, coordinated and balanced form of agriculture that has evolved in
response to agri-climatic conditions unique in India. However, as Ladakh opens
up to the world, its ancient and reliable agricultural system faces disruption and
agriculture takes back seat to fast growing sectors like tourism. The youth of
Ladakh today see agriculture as an un-remunerative, laborious, thankless
activity and leave the farms for urban areas. Our aim has been to highlight the
economic and social potential of farming as a commercial, yet non-exploitative
activity in tune with the ethos that makes Ladakh unique.
The focus of this report
Our work was primarily based on understanding the market potential of the
sector and devising a plan to tap it. The scope of agriculture encompasses
horticulture (production of fruits and vegetables), production of cereals and
grains like wheat, millets, rice, production/collection of medicinal and aromatic
plants (MAPs), collection of wild berries and fruits like Seabuckthorn, and the
further processing and value addition to these inputs. We isolated areas from
these that have the maximum potential for entrepreneurial activities and for
increasing the value accruing to farmers, finding food processing in general and
Seabuckthorn & Apricot products in particular to be the best for efforts on the
short term. Seabuckthorn in particular holds high promise for revenue
generation, to the tune of Rs. 300 million built up over 5 years.
We also find that finance, infrastructure, FPO certification and marketing form a
vicious circle that very few entrepreneurs can break, based on extensive
interviews and discussions with current and aspiring entrepreneurs, NGOs,
government officials and farmers.
The outcome of the study
Based on our analysis of this sector, we recommend two interventions viz.
developing small scale food processing clusters, with common facilities like
testing, power generation, water and sewage treatment, packaging and storage;
and establishing an autonomous agribusiness and agri-products marketing
board. These interventions are specifically aimed at breaking the vicious circle,
by facilitating entrepreneurship and cooperative activities in the nascent food
processing industry. We also propose the community based organic certification
model for increasing the economic viability of small and marginal farming
activities by promoting organic agriculture, and increasing the food security and
self-sufficiency in terms of fruit and vegetable production by developing its
1 Agriculture & Agribusiness: The Current Position
Agriculture forms the foundation of Ladakh’s culture and social structure, though
its significance as an employment and revenue generator has been declining.
The number of cultivators as percentage of the population has decreased over
the decades from 65.1% in 1971 to 58.5% in 1981, falling to just 37.6% in 2001,
even though it has increased in absolute numbers. The major crops are:
• Grains & cereals: Wheat, millets, barley
• Fruits & berries: Apples, Apricots, Peaches, Grapes, and
• Medical and Aromatic Plants
• Vegetables: Turnip, Cauliflowers, Peas, Cabbage, and Tomatoes
• Potatoes and other tubers: Potatoes, Yams
While agriculture accounts for a healthy chunk of employment, its contribution to
the economy is estimated at an insignificant 1-2% in monetary terms. This is
because of its subsistence/non-commercial nature and lack of value addition.
While Indian agriculture as a whole suffers from the fact that only 2% of the total
produce is processed and over 50% of the horticultural produce lost due to
spoilage, improper storage and transportation, the figure is judged to be worse
for Ladakh at least in terms of processing.
The agricultural season in Ladakh is limited to four months out of the twelve due
to the climatic conditions. While the season has been extended to five months
with the use of greenhouses, their use remains non-commercial and small
scale. There are no green vegetables or fruits available during the major part of
the year, and canned vegetables, tomato purees (both imported) and dried
produce are used during the winter.
The sector is partly organised. There are 79 primary agricultural societies, 8
sales and services societies, and 6 marketing societies as of 2002-03. The
growth rate has been slow/stagnant in all three sections. In agriculture, apart
from four marketing cooperatives supplying vegetables to the armed forces,
there is only one cooperative working on Seabuckthorn collection and
processing. Initiatives like osmotic dehydration of apricots and its marketing and
Seabuckthorn processing are partially/fully under the LAHDC.
The major part of agricultural produce is consumed internally/sold on an
individual basis, mainly by women selling their produce in markets. In
conversations with office bearers in the agricultural sector, it emerges that the
system of wholesalers buying produce in bulk from the villages, and then
retailing/reselling to retailers in the market is non-existent/incipient due to
certain socio-cultural factors.
Efforts to organise apricot drying and marketing have been successful on a
small scale, but need to be scaled up to meet internal and external demand.
The disorganised nature of the sector and adherence to certain inefficient
production and processing techniques implies that 40-60% of the apricot
production is wasted. The apricot production that is processed (sun dried) is
prone to spoilage due to incorrect picking methods, unhygienic and non-
controlled drying procedures.
Also, 80-90% of the possibly exploitable Seabuckthorn production is lost. In a
recent trial production of 500 MT of Seabuckthorn, the pulp sold for Rs. 6.5
million, with a net profit of Rs. 1.2 million.
Potential in processed fruits, vegetables and MAPs remains unfulfilled
The fragmented land holding pattern makes it difficult to introduce modern
mechanized agriculture practices, however, small farming equipment such as
winnowing machines and power tillers are becoming popular due to subsidies.
LAHDC and the Central Government subsidise agricultural loans, equipment,
seeds, greenhouses and solar pumps for irrigation.
Bank deposits are growing at a healthy rate in Ladakh. The increasing savings
rates imply a higher availability of funds for agriculture/food processing units.
However, the C/D (credit-to-deposit) ratio is an abysmally low 11%, and of this,
the primary sector that includes agriculture (2.3% of loans advanced) & small-
scale industries (3.5%) forms just 5.8% of total loans advanced.
This is reflected in the fact that the number of food processing units registered
with the DIC (District Industries Commission), with only 9 units registered over
the past decade.
1.1 Agricultural Issues
Growing dependence on non-traditional food crops: Traditional high protein
and nutritive content cereals like millet, barley and native grains are being
replaced by wheat and rice, encouraged by the highly subsidised public
distribution system. As rice is non-cultivable in Ladakh given agri-climatic and
soil conditions and other resource constraints, the Ladakhi economy is steadily
growing dependant on imports from the plains. Locally grown wheat and barley
is non-competitive with mass-produced monoculture crops from the plains of
Loss of traditional techniques of agriculture and biodiversity: the growing
preference for non-traditional crops and increasing pressure to commercialise
hitherto subsistence means of agriculture is gradually leading to the erosion of
traditional organic techniques of agriculture. The replacement of locally-
adapted, hardy and low resource intensive cereals by wheat and rice can lead
to a possible loss of biodiversity and extinction of valuable components of the
Unreasonable demands on resources: Crops from the plains are resource-
intensive and place unreasonable demands on the limited capacity of the
Ladakhi soil and water resources. This leads to loss of soil fertility, and water
shortages, and growing dependence on expensive and harmful agricultural
inputs like chemical fertilizers and pesticides.
Social impact: With growing dependence on external inputs, low incentive to
grow crops coupled with high expenses, and loss of markets to imports, has
forced a breakdown of the traditional system of a farming-based economy and
communal labour. It has also led to the migration of farmers, mostly youth, to
cities like Leh, where they work in tourism-related activities, increasing
pressures on the urban area.
Problems faced by Agriculture in Ladakh
Human Resources: There is a reducing interest shown by educated Ladakhi
youth in non-remunerative, subsistence agriculture, resulting in abandonment of
agriculture at many farms. The alternative to agriculture, the tourism business,
is highly lucrative and relatively effortless (This point emerged consistently in
surveys and focus group discussions held with students at school and college
level). There is also a marked preference for government and army jobs, which
has shifted a large part of the young male population away from the farms.
Lack of Value Addition in Agriculture: Agricultural production is still stuck at
the primary production level. A negligible percentage of the agricultural produce
is actually processed further and value added to achieve a higher realisation.
Thus, in most cases, agriculture is not a revenue generator, just a subsistence
tool fast being replaced by other, cheaper sources of agri-produce, such as the
PDS and imports.
Traditional methods non-competitive: In comparison with the large-scale
monoculture methods from the plains, the small scale, labour intensive,
diversified agricultural production methods are expensive and unable to meet
food grain, pulse or vegetable demand. Thus subsidised grains from the PDS
are more economical for the farmer. Fields are not abandoned due to social
reasons, but effectively grain production ceases.
Climatic conditions: These limit the growing season to three to four months
out of the entire year. Hence production is limited and cannot meet the year-
round demand. Fresh vegetables and fruits are available for only an extremely
limited period despite extension of the growing period to 5 months by the usage
of greenhouses. The climate is cold and dry for the major part of the year.
Logistics: Ladakh is fairly distant from the major markets (the Metros); road
access is blocked for 7 months of the year and is subject to the vagaries of the
weather. The air linkage is limited and expensive. For example, it is almost two
days by road to New Delhi (provided weather conditions permit). This makes
logistics a major challenge when it comes to accessing the New Delhi market,
as most fresh vegetables and fruits undergo a drastic temperature change over
this distance. Transportation problems also raise logistical costs.
1.2 Comparative Advantage of Ladakh region
Ladakhi agriculture enjoys comparative advantage broadly in the following three
a) Growing season: the Ladakhi summer allows farmers to grow fruits and
vegetables when the rest of India cannot. This provides the farmers with
an opportunity to sell off-season vegetables and fruits with virtually no
competition except from cold-storage/processed products.
b) Organic Agricultural tradition: while other regions may have to go
through a time-consuming and expensive transition to organic
agriculture, Ladakh’s tradition of organic techniques gives it an
c) Disease/pest free environment: this translates into disease-free seeds
and planting material for export, low/no pesticide costs and high yields
under correct conditions.
This comparative advantage can further be drilled down to specific verticals by
doing a SWOT analysis (Strengths/Weaknesses/Opportunities/Threats).
1.3 SWOT Analysis of Fruits
a) Unique, high value products like a) Scattered production which makes
Seabuckthorn and Apricot consolidation of produce for
b) Peak season that coincides with off- marketing/processing a challenge
season for fruits in the rest of India b) Logistics issues in delivering product to
c) Organic means of cultivation that reduce the rest of the country
input costs c) Absence of qualified food technologists,
d) Relatively low demand for water and which makes processing possibly non-
fertilizers, natural or chemical standard and deprives entrepreneurs of
e) High value Seabuckthorn available for technical support
free, with no cultivation costs d) Absence of marketing mechanism and
f) Presence of world class research expertise
institute like FRL
a) Possibility of obtaining organic a) Cheap, bulk imports of Seabuckthorn
certification which can overcome the products from China
transportation cost problem by justifying b) Opening up of agricultural sector under
a price premium WTO norms may encourage substitute
b) Number of educated youth who can be imports
trained in food processing and be c) Longer incubation period for fruit
attracted by the high margins cultivation projects may deter farmers
c) Possibility of substituting imports of d) States like Uttaranchal, HP may gain
Afghani dried apricot with locally first mover advantage by producing
processed apricot similar products due to similar agri-
d) Greater availability of loans and technical climatic conditions in certain areas
support as micro-finance and SHG
projects are implemented
• Immediate action in promoting small-scale food processing units,
especially apricots, tomato puree and Seabuckthorn.
• Long-term aim of organic certification and extension of fruit growing
areas into command areas of new irrigation projects.
• In the long term, establishing supply chain for fruit sales to northern
states of India.
1.4 SWOT Analysis of Vegetables
a) Hardy, cold resistant varieties of a) So far, bulk production not possible due
vegetables available which enable to resource and labour restrictions
cultivation in severe agri-climatic b) Substitutes for off-season vegetables
conditions esp. potatoes available through cold
b) Off-season cultivation compared to rest of storages in the plains
India c) Excess production during peak summer
c) Organic cultivation methods make it season, but lack of proper storage
possible to achieve premium prices in facilities for catering to winter demand
external markets d) Absence of organic certification
d) Overall cold, dry climate enable storage mechanism
and transportation for longer periods of e) Weak, non-standardised and small
time, without the expense of refrigerated scale vegetable processing capabilities
transport. f) High cost external labour for working
fields in absence of local labor
a) Obtaining organic certification for farm a) Abandoning of farming vegetables by
produce, and catering to vast Indian and youth due to labour-intensive nature of
foreign market for fresh/processed vegetable cultivation
organic vegetables b) Losing advantage in growing Indian
b) Climate ideal for production of high organic market due to first mover
quality European/continental vegetables advantage and logistically
which can be import substitutes advantageous location of Uttaranchal
c) Dry, virus and fungi free climate ideal for and other states
production of high quality disease free c) Reducing water resources as glaciers
vegetable seeds and other planting recede and snowfall lessens
d) Concurrent use of fast maturing less
hardy vegetable varieties in greenhouses,
and later maturing, hardy, local vegetable
varieties outside in open fields to
effectively obtain double cropping
e) Planting vegetables demanded by armed
forces using agri-climate suitable
vegetables identified and developed by
FRL, to fulfill demand.
f) Combining distinctive agricultural
practices, organic nature and tourist
appeal into agri-tourism modeled on
communes in Israel, and Australia
• Long term: Community-based Organic Certification, vegetable exports to
northern India markets
• Short term: Commercial greenhouses for fulfilling local and army
demand: See Annexure I for army demands and Annexure II for
comparative economics of vegetables and food grains
1.5 SWOT Analysis of Grains & Cereals
a) Highly nutritious, high fibre grains part of a) Economic non-viability in face of
the dietary tradition. These are subsidized grains from plains and PDS
increasingly being recognised in many b) Changing food habits which are not in
parts of India and abroad, and the effect favour of barley and millet
may percolate down to Ladakh c) Fragmented nature of land holdings that
b) Strong cultural compulsion to cultivate makes large scale, viable production
own grains which prevents people from impossible
abandoning fields despite absence of d) Movement away from agriculture by
economic viability youth
a) Catering to health conscious tourists with a) Total dependence on imported food
mixed/whole grain bakery products grains that adversely impacts food
b) Development and promotion of lighter, security and leads to a monetary drain
more ‘modern’ products from traditional from Ladakh
grains like millet biscuits, roast barley b) Loss of biodiversity and natural gene
breakfast cereal, flavored tsampa etc. bank due to extinction of hardy, disease
c) Growing improved, high yield grain resistant grain varieties
varieties that make cultivation viable
d) Crossbreeding traditional hardy varieties
with high-yield varieties and
Recommendation: This sector is influenced most severely by Central
Government policies on procurement and distribution through the Public
Distribution System. Hence it is out of our powers to recommend any
2 The Ladakh 2025 Vision Document
To follow the change with continuity but without compromising on its identity,
the Ladakh Autonomous Hill Development Council (LAHDC) has come out with
"Ladakh 2025 Vision Document" which emphasises the need to integrate old
with new and deal with the problem of decline in its resources.
The Vision statement envisages that Ladakh will emerge as the country's best
model of hill area development in a challenging environment, with its
sustainability embedded in ecological protection, crucial heritage and human
The vision for the agricultural sector wants to overcome all the barriers like lack
of adequate irrigation, depletion of water resources, neglected pastures,
coupled with small agricultural holdings etc. that have made the agricultural
Some of the salient points mentioned in the Vision are:
• Promotion of traditional Ladakhi agriculture while making judicious use of
already scarce resources to achieve best possible productivity
• Value addition to the local produce through food processing
• Making organic agriculture a profitable venture by exploring external
markets for the local produce
• Venturing into more profitable areas like horticulture etc. without
jeopardizing the food security in the area.
2.1 Linking the Vision with Strategy
The above areas are among the many mentioned in the document. The
approach was to isolate areas that could yield benefits to Ladakh. The focus
areas were decided after a 10-day research period where the potential impact
of intervention in the areas was judged.
Food processing was found to be one area which filled the need gap of the
farmers, entrepreneurs and the local economy in a profitable manner, and one
that could initiate the process of entrepreneurial activities by demonstrating
immediate and visible benefits to all involved. Successful activities in this area
are especially feasible due to a greater level of awareness, wider need-gap, a
demonstrated local and tourist market both during tourist season and in the off-
season, and the relatively lower gestation period for projects. The projects are
also scalable and benefit the farmers directly, and provide opportunities for
Organic Certification is a longer-term objective, requiring three years and
greater levels of commitment and expense, and also a certain maturation in the
market for the produce in India. While plans for other areas like greenhouse
agriculture, natural dye production and aromatic oil extraction have been
developed too, they have not been included in this document due to limitation
The linking was done on the basis of impact analysis, and the strategy was
developed on the basis of the gaps identified through interactions with the
stakeholders at all levels. The recommendations are aimed specifically at
bridging these gaps and achieving the twin aims of entrepreneurship
development and the objectives set forward in the Vision Document.
Areas Recommended for Immediate Action
Of all the opportunities identified in the agricultural and agribusiness sector in
Ladakh, two areas in particular have been identified as where action can yield
significant results, and where immediate action is recommended. These are
processed Seabuckthorn and Apricot products. Other areas suffer from lack of
capacity and requirements for long-term investments, and uncertain market
conditions given the lack of market research. Both of these, however, are
proven in the internal market (mainly tourists) and suffer from the lack of
domestic production capacity, quality standards, proper packaging and
concerted marketing efforts. Both have abundant, cheap raw material that is
currently not being utilised to any significant level/value addition. The following
value-addition analysis was carried out for these products.
2.2 Value Addition Analysis for Apricot Products (Oil and Dried
Apricot Drying and Oil Extraction Value Chain
Avg. Price Per Kg- Rs 15
Total Value- Rs 37.5 million
Dried Apricot (Nut Removed) Apricot Nut
250 MT 250 MT
Avg Price per Kg- Rs. 120
Total Value Rs. 30 million
Apricot Kernel Apricot Nut Shell
72 MT 178 MT
Avg Price Per Kg- Rs. 400
Total Value Rs. 16 million
The above analysis on yield proportions is based on averaging the estimates
made by farmers and entrepreneurs, as no data were available through
official/published sources. Seeing that a large proportion of the apricot
production (40-60% by various estimates) goes to waste due to various
reasons, significant value can accrue to farmers who sell/process excess
production of apricot, especially as the process is non-capital intensive.
2.3 Value Addition Analysis: Seabuckthorn
Analysis of Value Addition in Processing of Seabuckthorn
Fresh Seabuckthorn Berry yields the following 1.6 Kg
a) Pulp 1 Kg
b) Seed and Skin 0.6 kg
Pulp Oil content at 5% of fresh berry weight .08 Kg
Seed Oil Content at 10% of fresh berry weight 0.16 Kg
Total Oil content 0.24 Kg
Input Qty Per Unit Cost (Rs.) Total Cost (Rs)
Fresh Seabuckthorn Berry 1.6 Kg 15 24
Seabuckthorn Pulp from Berry 1 Kg 24
Sugar 7 Kg 16 112
Water 7 Litres 1 7
Juice 8 Litres 143
200 ml plastic bottles with printed labels 40 Nos. 6 240
Packaging Subtotal 240
In cardboard cartons 40 Nos. 1 40
Transportation Subtotal 40
Power, Labor and Administrative Charges
Taken as lump sum 10
PLA Subtotal 10
Total Cost of Production 433
Selling Price 40 Nos. 20 800
Less: Retailers Margin @ 20% 40 Nos. 4 160
Less: Cost of Production 433
Net Profit 207
Apart from the value addition of 1.6 kg of Seabuckthorn worth Rs. 24 into Juice
worth Rs. 800 with a net profit of Rs. 207:
• Seabuckthorn Oil has a selling price of Rs. 8000/litre in the market.
Assuming 75% recovery of oil, the content in the 1.6 Kg berry is worth
• Similarly, Seabuckthorn Berry skins and leaves, which have a high
content of flavonoids, sell as Herbal Tea for Rs 500/kg with marginal
processing, and as amchur (sour, dried mango powder, used as a
flavooring agent) substitutes.
Thus, 1.6 Kg of fresh Seabuckthorn berry can be value added into products
worth more than Rs. 2500.
The total estimated production of Seabuckthorn in Ladakh is put at 5000 MT
(from remote-sensing data analysed by the Field Research Laboratory, DRDO,
Ministry of Defense)
Total Estimated Yield of Seabuckthorn in Ladakh (MT) 5000
Assuming 50% is recoverable (due to accessibility and logistics) 2500
Assuming 20% wastage and spoilage of berries in transit and in processing 2000
Total Worth of Seabuckthorn Juice and Oil from above (in Rs) 3,125,000,000
• That is, the total value of the juice and oil from Seabuckthorn with the
above assumptions is more than Rs. 3000 million i.e. more than Rs 3
• While this is possible only with massive efforts from the LAHDC and
others, significant investments and highly efficient production and
marketing efforts, as a short-term measure (over next 5 years) it is
feasible to achieve at least 10% of this i.e. Rs. 300 million through
progressive addition of capacity (small-scale units).
• As a case in point, China is currently producing USD 36 million
(approximately Rs. 1.5 billion) worth of Seabuckthorn products.
2.4 Estimation of Capital Investments Required, and Profits from
Small Scale Processing Units
The next step was to analyse the amount of investment required by the average
entrepreneur to set up a small unit manufacturing Apricot jam and
Seabuckthorn juice. This was done with inputs from the District Industries
Commission and extensive interviews with entrepreneurs and non-
The following is the estimate of setting up a unit with the capacity to produce
3000 bottles (500 grams each) of Apricot Jam, 2000 bottles (200 ml each) of
Seabuckthorn juice and small quantities of apricot oil & juice.
Budget for setting up Apricot Jam & Seabuckthorn Juice Production Unit at Leh-
1 Land and Building 475000
2 Machinery and Equipment
1) Pulping Machine 1 33000
2) Fruit Crushing Machine 1 30000
3) Juice Extraction Press 1 17000
4) Boiler and Steam Jacket 1 90000
5) Head Bottle Sealing Machine 1 19000
6) Cap Sealing Machine 1 5000
7) Crown Corking Machine 1 56000
8) Peeling Set 1 2000
Machinery & Equipment Subtotal 252000
3 Generating Set 1 75000
4 Lab/Testing Equipment 1 20000
5 Installation, Transportation & Taxes 50000
Infrastructure Subtotal 397000
6 Staff (Per Month) Nos.
Supervisor (by owner) 1 6000
Skilled Labor 1 5000
Semi skilled 3 7500
Helper 1 2000
Total Staff Expenses Per Month 14500
7 Raw Materials
Apricot 2200 Kg@ Rs 15/Kg 33000
Seabuckthorn 10000 Kg@ Rs 15/Kg 150000
Sugar 4000 Kg@ Rs. 16/Kg 64000
Raw Material Expenses Per Month 248000
8 Fuel 5000
9 Other Expenses
a) Transportation 2500
b) Packaging @ Rs. 8 per bottle jam and Rs. 6/juice 107500
c) Electricity 1000
c) Pre Operative Expenses 6000
10 Working Capital Requirements (PM)
a) Staff & Labor 14500
b) Raw Materials 248000
c) Other Expenses 117000
Total Working Capital Requirements (PM) 379500
11 Total Capital Investment
a) Building 475000
b) Machinery and Equipment 397000
c) Working Capital 379500
Total Capital Investment 1251500
12 Cost of Production Per Month
a) Interest on Capital Investment 12515
b) Depreciation on Plant and Machinery @1% 3970
c) Working Capital for 1 month 379500
Total COP per month 395985
13 Expected Sales Per Month
a) Jam (sales @ Rs. 50/ 500 gm bottle) 150000
b) Seabuckthorn Juice (sales @ Rs. 20/200 ml bottle) 200000
c) Apricot Oil (sales @ Rs. 400/lt) 50000
d) Apricot Juice (sales @ Rs 20/200 ml bottle) 25000
Expected Sales Per Month 425000
14 Expected Profit (PM) (Sales less WC) 29015
• Thus, a unit set up with the following specifications and production can
potentially make a profit of almost Rs. 30,000 a month.
• The District Industries Commission offers 100% subsidy on the
generating set, and 25% subsidy on the land and machinery for such
units. Hence the capital investment requirements reduce by a major
The table below indicates prices of some processed fruit products in the
Ladakhi & New Delhi market.
Indicative Prices of Existing Processed Fruit Products
Product, SKU, Brand Price/Unit
Seabuckthorn Juice (200 ml)- Sindhu Farm Products Rs. 20
Leh Berry' Juice (1 lt. Tetrapak)- Ladakh Foods Limited (Institutional Sale) Rs. 42
Seabuckthorn Jam (500 gm)-Sindhu, Lampa Rs. 50
Seabuckthorn Squash (1 lt.)- Navdanya (Labeled Organic) Rs. 110
Apricot Jam (500 gm)-Sindhu, Lampa Rs. 50
Dried Apricot (1 Kg) Rs. 70
Dried Apricot (200 gm), Osmotically Processed (Trial Sales) Rs. 100-110
Apricot Juice (200 ml)- Appela Rs. 20
Apple Juice (200 ml)- Appela Rs. 20
Strawberry Jam (Various sources, artificial flavor to natural berries) Rs. 50- Rs 70
Apricot Oil (200 ml)- Navdanya (labeled organic) Rs. 83
2.5 Recommendations for Encouraging Entrepreneurship in Food
Identification of Gaps
After numerous and extensive interactions with current and would-be
entrepreneurs, farmers, government functionaries, students & cooperatives, the
following gaps were identified:
Finance: Setting up an economically viable food-processing unit requires
significant financial commitment (see annexure for project budget for setting up
a food processing unit) over the entire incubation period of the project, and
working capital commitments far in excess of what an entrepreneur would
require for most alternative businesses (i.e. tour operations in Ladakh). Most of
this investment has to be made prior to getting FPO certification. It was
observed that there tends to be a vicious circle that most entrepreneurs are
unable to break: for setting up the infrastructure required as a prerequisite (see
annexure for synopsis of FPO requirements and certification fees schedule) for
FPO certification, the entrepreneur requires a loan, while the assurance of
getting the FPO is central to the business plan and project report that the
entrepreneur must submit to the banks as part pf the loan process. Thus as
long there is no certainty of obtaining the certification, banks are hesitant to
lend, and it is virtually impossible for the entrepreneur to obtain the certification
without the loan for setting up the infrastructure.
FPO certification: Essential for manufacturers of fruit products, the FPO
licensing process is rigorous and includes periodic inspections of the
infrastructure and the production and testing facilities of the unit. As mentioned
above, the prerequisites for certification require significant investment.
Moreover, most entrepreneurs are unaware of the process and require technical
guidance through the procedure. FPO certification was mentioned as the
second most important challenge after financing. See Annexure I for detailed
FPO guidelines on setting up units.
Packaging: From discussions with entrepreneurs about the break-up of
production costs, it emerged that packaging constituted between 20 to 30% of
the price of the product. For example, for a jam jar retailing for Rs. 50 in the
market, the cost of the bottle and label worked out to be Rs. 10-12 and for a Rs.
20 bottle of Seabuckthorn juice, the cost of packaging was Rs. 6. This ties up a
large proportion of the working capital as the bottles are sourced from New
Delhi and have to be paid in advance. One entrepreneur described his
production as being limited entirely by what he could pay out in advance for the
bottles and packaging material. Secondly, these bottles (jam) are not reused
and hence are a sunk cost for the manufacturer. Thirdly, the entrepreneur lacks
economies of scale because the size of his orders is much smaller compared to
large-scale manufacturers from the plains.
The vicious circle can be represented as:
Marketing: Even after the above three hurdles are overcome, the concern of
the entrepreneur remains marketing the product. The population of Leh is small
(approximately 120,000) and dispersed (2 persons per km sq.). Most of the
population grows and consumes its own food products. The only significant
population concentration is at Leh city with a population of around 20,000,
which swells by an average of 36,000 due to tourist arrivals during the peak
tourist season. Most of these tourists are willing to try out the jams and juices
that are the specialty of Ladakh. Thus for most entrepreneurs, tourists are the
main target market. However, due to logistical difficulties, unfamiliarity with the
market structure, lack of marketing expertise and contacts, and improper
packaging, most entrepreneurs remain restricted to Leh, and cannot venture to
demand centres like New Delhi or Chandigarh.
On the basis of these gaps, and keeping in mind the characteristics and
problems of Ladakhi agriculture as set forward before, we decided that the
following approach to solving the problem would be a viable method of filling in
the gaps and encouraging entrepreneurs to set up agribusiness ventures and
boost the flagging fortunes of agriculture in Ladakh.
3 An Approach to Bridging the Gaps in Agribusiness
and Food Processing
The proposed approach has two angles of attack on the defined problem
• Setting up small-scale food parks based on the cluster concept of industries
at village, block and zone levels, and leasing out the set-up units and
facilities to entrepreneurs and cooperatives.
• Setting up Central Board of Agribusiness and Marketing which looks after
the aspects of marketing, external linkages, technical assistance, facilitation
of certification and financial assistance.
3.1 Food Parks
The concept of small-scale food parks or clusters of agri-processing units is
aimed at plugging some of the major need-gaps in entrepreneurship in Ladakh.
Internationally, the current thinking is that a cluster of industrial units should be
set up in a region so that they can share the same infrastructural facilities. This
creates external economies of scale, bringing down the cost of infrastructure
per unit, and enables the units to avail of facilities that they, individually, would
have found uneconomic and expensive to set up, run and maintain. While food
parks are being set up on a mega scale in the rest of India, with investment
running in to the thousands of millions of rupees, downscaling the concept to a
size more appropriate to the situation in Ladakh can help entrepreneurs and
The proposal is for setting up clusters of units with common facilities like testing
and laboratory infrastructure, water treatment and heating, waste and sewage
disposal facilities, controlled atmosphere storage, power generation, and
packaging. The infrastructure will be set up by the LAHDC and the DIC by
involving local builders and contractors for construction, in consultation with
entrepreneurs, cooperatives, and with the guidance of CFTRI & FRL; in strict
conformance with the requirements of FPO/other certifications for such
infrastructural facilities. Under the Tenth Plan Schemes for Food Processing
Industries set forward by the Ministry of Food Processing Industries, the
Ministry funds “33.33% of the project cost in Difficult Areas (this includes J&K
state) subject to a maximum of Rs. 4 crores for provision of common facilities
like cold storage, food testing and analysis laboratory, effluent treatment plant,
common processing facilities, power, water supply, etc.”
The units will then be long term-leased or sold to entrepreneurs and
cooperatives depending on their preference and financial capacity.
Personnel from a new Ladakh Board for Agribusiness and Marketing will run the
common facilities, or these again will be let to entrepreneurs who have the
requisite qualifications, under the supervision of the Board.
It will be essential for all units set up in the cluster to, if relevant, obtain
FPO/AGMARK certification. This is because the cluster or industrial unit has
been set up with one of the aims being to overcome certification-specific
Testing and Laboratory Infrastructure: This is one of the most important
requirements of setting up an FPO certified unit. Most entrepreneurs find that
setting up the testing laboratory and manning it with qualified personnel is a
challenge; and they lack the expertise to do it themselves. Common testing
facilities will allow them enjoy the benefits with shared, and hence lower,
expenses. This will also facilitate certification. The common laboratory will have
the requisite testing equipment and trained personnel and will perform testing
and quality control activities in keeping with FPO specifications, on payment of
nominal fees per test. Under the Tenth Plan Scheme for Food Processing
Industries under the Ministry of Food Processing Industries, GOI, the MFPI
funds the entire capital expenditure (as grant-in-aid) for setting up a Quality
Packaging: Due to the typically small scale of operations, most entrepreneurs
and cooperatives lack the finance and economies of scale for setting up a viable
packaging facility that provides cheap, hygienic and standardized packaging.
Setting up a small bottling plant, for example, will serve units manufacturing
apricot, Seabuckthorn and other juices, tomato sauce and puree, and even
apricot oil. With a common, standard-sized glass bottle, each cluster can
achieve a degree of economy of scale, and flexibility in maintaining inventory.
That is, units can trade inventory according to their requirements. Similarly,
standard plastic packaging equipment can be set up at the cluster. The MPFI
provides “25% of the total cost of plant and machinery and technical civil work in
General Areas and 33.33% in Difficult Areas subject to maximum of Rs. 2
crores for establishing packaging centre independently and in food parks if the
packaging centre is not already a part of the common facilities” as grant in aid
Building and Land: these account for a major chunk of the project expenses.
The FPO and other certifications have specified certain minimum requirements
that do not match with traditional Ladakhi building techniques. For example,
Ladakhi buildings are low roofed, do not have strong cross ventilation, and in
most cases, piped running water supplies due to the cold climatic conditions,
whereas FPO requires a high roofed building with good cross-ventilation and
running water supplies. The industrial cluster will be built to conform to these
requirements, removing a major hurdle to certification.
Finance: Space in the premises of the food park will be term-leased/sold to
entrepreneurs and cooperatives depending on their willingness and ability to
pay. The provision of ready infrastructure and shared facilities on annual lease
payments will substantially reduce the financial burden (interest and principal
payments can be diverted towards working capital) on the entrepreneur and
obviate the need to take heavy, expensive loans from banks. This provision of
the food parks should make them very attractive to people who have held back
from setting up food/fruit processing units because of the financial burden.
Power: While the use of generators for electricity is heavily subsidised by the
DIC and the LAHDC, the high running costs and problems of availability of
diesel in remote areas is a problem faced by all potential entrepreneurs. The
food park will have a single large generator with an electricity supply sufficient
for the requirements of the processing units. The electricity consumption by the
various units will be metered and the fuel and maintenance costs will be
amortised among the units proportionally. During the off-season i.e. winter, the
generator can be used for supplying electricity to the nearby village dwellings. In
the case of multipurpose projects like the Igoo-Phey Irrigation Project, where
there is provision for hydroelectricity generation as well, this problem is not
much of an issue. Setting up micro-hydel projects in villages/village clusters is a
Water Supply and Treatment, Sewage Treatment: Food processing activities
require, under the FPO regime, a permanent and 24*7 running supply for
treated water conforming to set standards. Such a supply is an expensive
proposition for individuals. The same is the case for sewage treatment set-ups.
Having common facilities on both these fronts will benefit the units by reducing
their capital investments, maintenance and running charges; concurrently
preserving the delicate Ladakhi environment around them.
Logistics: Instead of individually approaching transporters and incurring
uneconomical less than Full Truck Loads (FTL), the units at the Food Parks will
be able to club together loads to achieve FTL, saving on transportation
expenses. Transportation is one of the major expenses incurred by any industry
in Ladakh due to the tough terrain and weather conditions, and villages are far
flung and scattered. This makes logistics one of the major challenges.
3.2 Process of Setting up Clusters
The food processing clusters can be set up at three levels: the village/village
cluster level, the block level, and at the central level. The process and rationale
is as follows:
I Identification of clusters of villages/hamlets with sufficient
production/surplus of agricultural produce such as apricot, Seabuckthorn,
tomatoes, peas etc & setting up of village/village cluster level food processing
centres with basic infrastructure leased to entrepreneur/cooperatives. The level
of facilities provided would be dependant on the amount of produce that can be
processed i.e. on the economies of scale. Packaging will depend on economy
of scale, requirement and perishable nature. In the case of highly perishable,
bulk products requiring greater level of facilities and packaging, such as
Seabuckthorn juice (which has to be processed within a few hours of
harvesting), the pulp can be processed at this level and sold to
cooperatives/entrepreneurs at the block level. Thus, the unit at the block level
will procure Seabuckthorn pulp in bulk from various such clusters and process it
in large, economic quantities with proper packaging.
II Block level Food Parks: These will have common infrastructure (generator,
solar water heating/treatment, sewage & waste disposal, testing equipment and
laboratory, communications), packaging (partially or fully processed produce)
unit and logistic facilities again, but have a higher level and capacity compared
to the previous level. Fully/Partially/un-processed produce from the village
cluster level will be fully processed and packaged at this level.
III Ladakh Agribusiness and Marketing Board (LAMB): This, the highest
level, will have centres at Leh and Nubra, the two central areas with access to
the greatest amount of agricultural produce and the requisite logistical facilities
and connectivity. These centres, run by the Board, will have mass-packaging
facilities and possibly processing facilities for capital-intensive activities such as
apricot and Seabuckthorn oil extraction plants (the former costing Rs. 30
million). A Tetrapak plant costing the same can be used for multiple purposes
such as packaging apricot and Seabuckthorn oil, juices, sauce and puree etc.
Thus for such plants, the other centres will serve as feeders: e.g. for
Seabuckthorn, the skins and seeds gathered from the village and block level
centres can be processed in bulk and hence economic quantities at a oil
extraction press/solvent based extraction plant at Leh or Nubra.
It will carry out final packaging of products, labeling, marketing, and, depending
on the feasibility, set up and operate a Tetrapak/apricot oil plant.
Macro Structure of Model
Central Agribusiness & Marketing Board
Centers: Leh, Khaltsi, Nubra Valley
Block Level Food Processing Block Level Food Processing
Industries Cluster Industries Cluster
Village/Village Cluster Level Village/Village Cluster Level Village/Village Cluster Level Village/Village Cluster Level
Villagers, Entrepreneurs & Cooperatives
Schematic Representation of Cluster Industries
Universally, the question of marketing the agricultural produce was mentioned
as the major downstream challenge. This was observed at all levels: it was
raised as an issue by students at a Focus Group Discussion held at the only
college in Leh, by would-be and current entrepreneurs, by farmers and by
government officials at the Agricultural and Horticultural Departments and by
Self Help Group members at the various villages visited.
The Ladakhi market, as mentioned before, has the characteristic of being
limited in size and in operation to just the four summer months of the year, and
the climate means that the area is cut off from the rest of India (road links) for
almost 7 months of the year. Secondly, the average Ladakhi entrepreneur has
no linkage with the market outside Ladakh. Combined with the lack of marketing
expertise, small scale of operations and financial constraints, the average
entrepreneur or cooperative finds itself ill-equipped to handle the crucial task of
branding, distributing and selling its products. This is despite the presence of
some unique products like top quality apricots and Seabuckthorn, and the off-
Seeing the necessity of establishing a market linkage and of branding and
promoting Ladakhi produce in an organised, focused and profitable manner, the
second part of the recommendation proposes the creation of a Ladakh Board
for Agribusiness and Marketing on a Ladakh-wide level.
The proposed Board should be autonomous/semiautonomous and run by
professional managers and marketing professionals who are paid on the basis
of their performance.
The model to be followed can be the Himachal Pradesh Horticultural Produce
Marketing and Processing Corporation Ltd. (HPMC).
The main purpose of the Board will be to plug the gaps previously identified on
an institutional level. The Board will be responsible for branding and marketing
the agricultural produce of Ladakh on a Ladakh-wide and national basis,
maintaining linkages with the agricultural produce marketing boards of other
states and bodies like HPMC and KVIC, technical and research institutions like
the FRL, CFTRI, and bodies like APEDA, technical guidance and facilitation of
certification, ensuring quality standards are met at all levels in the value chain,
and financial assistance.
For marketing purposes, the proposed Board will set up outlets at all the major
tourist areas in Ladakh and ensure distribution through retail/cooperative
Advantages of the System
• This system is characterised by a great degree of flexibility offered to the
entrepreneur/cooperative. At each level, the entrepreneur or the
cooperative has the independence to sell the fully/partially processed,
bulk or packaged product to the Ladakh Agribusiness and Marketing
Board or any other party. The options are:
• They can sell the fully packaged and branded product to the LAMB for
selling through its outlets in Ladakh and for exports out of Ladakh
• They can sell the partially processed produce to the LAMB and the
LAMB will fully process it, package and market it under its umbrella
• They can be totally independent of the Board and sell the produce under
their own brand and through their own distribution network.
• This kind of independence and flexibility offered to the
entrepreneur/cooperative gives space to all risk profiles and the freedom
of choice reduces the problem of corruption, and government
• It also avoids the formation of government monopoly and creates a
competitive business landscape that can foster entrepreneurs while
providing them with the basic infrastructure necessary for their ventures.
• The combination of the food park concept and LAMB can be successful
in plugging the gaps that were identified at the beginning of the section.
3.4 Bridging the Education, Training and Information Gap
While a number of business plans have been made detailing what it takes to set
up and run an agribusiness venture, and the LAHDC, JKIDC and the
government have a number of schemes aimed specifically at promoting
entrepreneurial and cooperative activities in this sector, most of the people
interviewed turned out to be unaware of these efforts to help them. This gap
was very glaring especially among the students just about to graduate from the
degree college at Leh, all of whom showed a definite preference for
‘government jobs’ because they felt that agribusiness was not profitable
business and that the government had done nothing for to make it profitable
a) Dissemination of Information: One of the main activities of LAMB will be
the dissemination of information about agribusiness opportunities in the area.
This will include training camps, and the publication and distribution of
handbooks on business opportunities, food processing and agricultural
techniques in the local language i.e. in Ladakhi and in Urdu.
b) Setting up Food Processing/Technology Training Centres & introducing
FT/P courses in Polytechnic: As specified in the FPO guidelines, the
supervision of processing and production activities at FPO certified units have
to be undertaken by a person who has a basic “B.Sc. degree with
Chemistry/Agriculture as one of the subjects or a Diploma or a certificate in fruit
preservation or a course of at least 3 months duration from a recognised
institution”. Currently entrepreneurs interested in food processing have to attend
courses in Srinagar/Jammu for six months, incurring the expenditure of studies
and stay away from home, as well as miss out on earning for this period.
• Hence it is recommended that a food processing/food technology course
be introduced at the local Polytechnic, or, a Food Processing and
Training Centre (FPTC) be set up for which grants-in-aid are available
from the Central Government under the Tenth Plan schemes for
promoting food-processing industries. Courses may be full/part time to
allow students to attend courses along with work or college.
• Another option is to set up an adjunct for Food Processing Training to the
existing degree college. Under the Tenth Plan Schemes, grants up to Rs.
5 million would be provided to institutions such as colleges, universities,
and technical institutions etc. for the creation of infrastructural facilities
like a library, laboratory, pilot plants etc., for running degree/diploma
courses and training programs including extension services for food
• A multi-product line FPTC set up under such schemes is eligible for Rs.
0.75 million for fixed capital costs and Rs. 0.2 million as revolving fund,
as Rs. 50,000 as expenses for training at the CFTRI. As these centres
are expected to be self-sufficient financially by selling products
processed in the pilot plants, they will not be a financial burden on the
LAHDC. At least two of these centres can be set up at Leh and at Nubra
with trainees encouraged to set up units at the food parks and to work at
the LAMB processing and packaging units
4 Organic Agriculture
4.1 Identification of gaps
As mentioned beforehand, Organic Agriculture is the way forward for most of
the small and marginal farmers of the region, and for upcoming entrepreneurs.
Most of the Ladakhi farmers lack the resources to go in for organic certification
as the process is time consuming (up to 3 years) and expensive (from Rs.
20,000 to Rs. 30,000 for small farmers). Secondly, organic certification involves
the application of certain techniques and adoption of certain practices that
require education and training that again they lack. Thirdly, marketing remains a
major concern, as the local market does not provide the market premium.
Comparison between Traditional & Present-day Organic Agriculture
Characteristics Traditional Agriculture
Basic objective Subsistence Commercial as Well
Irrigation Primarily Rain-fed Any Area
Cropping Intensity Low High
Low Genetic Yield
Varieties High Yield Potential
Risk from Diseases, Very Low due to Ideal
Low because of Genetic
Pests and Abiotic Microbial Balance in the
Varietal Purity Low Concern High Concern
Productivity Low High
Inputs Low Low
Certification of Produce Not Required Required
Marketing Less Concern No concern
4.2 Approaches to Bridging the Gaps in Organic Produce
Certification and Marketing
Possibly the best approach to overcoming part of the above gaps is Community
Based Certification facilitated by an Organic Board set up as an
autonomous/semi autonomous body by the LAHDC, with the help of APEDA
which provides accreditation to Organic Certification bodies.
Process of Community Based Certification
Identification of Clusters: In Ladakh, this will involve identifying pockets of
agriculture in the region which have not used agrochemicals at all during the
past 3-5 years, and if possible, areas that have never used agrochemicals. This
is essential to make the certification process as low cost and short duration as
possible. Generally this exercise is carried out through secondary data
collection, field visits and discussions with stakeholders i.e. the farmers and the
potential consumers. It should be possible to develop market linkages at this
point in time by contacting major clients such as supermarkets stocking organic
produce (e.g. FoodWorld), understanding their requirements and focusing on
areas that produce fruits and vegetables that have a major demand. The size of
the clusters depends on the volumes and range of each farm produce required
by the clients, if the Organic Board has identified the clients. The identification
of clusters can take up to 1-3 months time.
Enrollment & Registration of the Farmers: This will involve enrolling farmers
by developing and allotting micro-plans for each of them on an individual basis.
These micro-plans will consist of a feasibility study of the organic conversion, a
list of the required produce and the product mix. Once sufficient enrolled they
will be registered with the Organic Board.
Imparting Training in Organic Farming Practices: At this stage the scientists
and staff at Organic Board will evolve the complete package of practices for
organic production in the identified clusters based on soil tests, water samples
etc. The Organic Board will train the farmers in the techniques and skills
essential for adhering to organic principles. This will cover the three-year (or
less) transition period. During this period the village clusters will continue to
grow produce in accordance with organic principle, and the board will provide
the logistics for market access. The Organic Board will provide assistance and
• Conducting tests of the soil and water
• Preparing the land for organic farming
• Preparation/procurement of planting material
• Planting as per the organic norms
• Preparation of biodynamic fertilizers and other inputs like bio-pesticides
• Guiding the farmers in constructing farm sheds, cattle sheds, storage
house as per organic standards
• Weeding Operations
• Harvesting and storage
Certification: After the transition period, the Organic Board will facilitate
community-based certification to the village/village clusters as Organic Farming
Zones (OFZs) by helping in inspection and certification of these organic clusters
by internationally accredited certification agencies. The Board will continue to
offer technical services and guidance as well as continue to monitor the
agricultural practices of the OFZs.
Marketing: The LAMB will undertake the process of marketing the produce of
the OFZs, initially to the tourists and in later stages to the external (rest of India)
market. It will link up with APEDA for exports, and with other marketing bodies
including supermarkets for marketing the produce.
Export Market: The Organic agricultural export market is one of the major
drivers of greening of agriculture in India. The current production of organic
crops is around 14,000 tons. Out of this production, tea and rice contributes
around 24% each, fruits and vegetables combine makes 17% of this total
production. From India around 11,925 tons of organic products are exported,
that make around 85% of total organic crop production. Major export markets
for Indian producers are Australia, Belgium, Canada, France, Germany, Italy,
Japan, Netherlands, Sweden, Singapore, South Africa, Saudi Arabia, UAE, UK,
Annexure III Guidelines For Setting Up Of Unit Under Fruit Products
No person shall carry on the business of a manufacture of fruit products
including synthetic syrups, synthetic vinegar and aerated sweetened beverages
except under and in accordance with the terms of an effective license granted to
him under FPO.
Category-wise area requirement, annual production limit and license fee for
one terms or part thereof (Ref. Clause 5(2) and part I (B) of the Second
Schedule of Fruit Products Order, 1955
and fees for Annual production
Category office one term permissible per
purpose or part calendar year
(In Sq. meters)
(In sq. thereof
25 25 Rs.100/- Up to 10 M.T.
Cottage Above 10 M.T. but less
60 60 Rs.250/-
scale than 50 M.T.
Above 50 M.T. but less
Small scale than 100 M.T. with
100 100 Rs.400/-
`A’ installed capacity not
exceeding 1 M.T. /day.
Below 250 M.T. with
Small scale installed capacity not
150 150 Rs.600/-
`B’ exceeding 2 M.T. per
Above 250 M.T. with
Large scale 300 300 Rs.1500/
exceeding 2 M.T. per
• Area occupied by machinery shall not be more than 50% of the
• The minimum height of the factory premises under Home Scale `B’ and
Cottage Scale categories is 10 feet and for small scale & large-scale
categories 14 feet.
Every manufacturer shall manufacture fruit products in conformity with the
sanitary requirements and appropriate standards of quality and composition
specified in the Second Schedule of FPO.
The Second Schedule
Part 1(a): Sanitary requirements of a factory of fruit products
• The Premises shall be adequately lighted, ventilated & cleaned by white
washing/color washing or oil painting.
• Windows & all openings shall be well screened with wire-mesh & the
doors fitted with automatic closing springs, roof shall be permanent, floor
• The equipments and the factory shall not be used for manufacture of
repugnant products like fish, meat, eggs etc. However, permission may
be granted as a special case if arrangements are made for disinfection of
premises after changing from meat products to fruit products (one month
idle gap will be required for changeover).
• The premises shall be located in a sanitary place with open
surroundings, preferably in industrial area/estates. The premises shall
not be used as or communicated directly with residence.
• Adequate arrangements for cleaning equipments, machinery, containers
tables and raw materials shall be provided.
• Copper brass or iron equipments, containers or vessels are not
permitted, in the preparation, packing or storage of fruit products, only
aluminum, stainless steel, glass or tins equipment are allowed.
• The water used shall be potable and shall be got examined chemically
and bacteriologically by a public Health Laboratory (if no municipal water
is available at the premises). The water sample should be drawn for such
examination by the public Health Authority of the area where the
premises is located or should be drawn in the presence of the above
authority. Free flowing tap water of 1 kilolitre per day shall be made
• Adequate drainage system and provisions for disposal of refuse shall be
• Sufficient number of latrine & urinals shall be provided for workers.
• Wherever cooking is done on open fire, proper outlets for so
smoke/steam etc. like chimney, exhaust fan etc. shall be provided.
• The workers engaged in the factory shall be healthy and shall be
medically examined, inoculated and vaccinated whenever required.
• The workers shall be provided with aprons, head-wars gloves etc. and
shall be personally neat and tidy.
Part 1(B): Qualifications of technical staff
Production shall be supervised by a person possessing one of the following
• B.Sc. with Chemistry/Agriculture as one of the subjects.
• A Diploma or a certificate in fruit preservation or a course of at least 3
months duration from a recognized institution.
• B.Sc. (Tech.) with Food Technology/Chemical Engineering with at least
one year experience in fruit preservation factory.
• B.Sc. with CFTRI Diploma or Diploma of Kalamassery (Kerala
• B.Sc. with Chemistry/Agriculture with three years experience in fruit
Minimum equipments & machinery for unit operation
1. Washing of raw Rectangular tanks with false bottom of not
materials less than 20 gallons capacity
2. Washing of bottles 1. Tanks having not less than 40
2. Bottle washing machine, brushes
(*machine, rack, trolley).
3. Buckets (* Sterilizing tanks).
3. Preparation of Fruit / 1. 2-1/2 Ft. high table with aluminum/
Vegetables steel top having area not less than
20 Sq. ft.
2. Not less than 12 trays.
3. Stainless steel knives.
4. Equipment for blanching
4. Juicing, pulping & 1. Juice extractor of basket press
Mixing 2. (* pulping machine/hydraulic press).
3. Steel sieve.
4. Vessels of not less than 100 litres
5. Processing 1. Furnace/Gas stoves (* Boiler)
2. Vessels/Steam jacket kettle.
5. Thermometer, hydrometer
7. Sensitive balance for weighing
chemicals, color etc.
6. Fermentation Barrels/Carboys/Earthen jars.
7. Filling & sealing 1. Mugs/Funnels (* Filling machine).
2. Crown cork machine/R.O. sealing
3. Weighing balance.
8. Exhausting, 1. Tanks with crates/Exhaust Box.
Processing for cans & 2. Double Seamer/Semi-automatic
bottles. cans sealer.
3. Cooling tanks with crates/cranes.
4. Pressure cooker/retorts/sterilizing
5. Incubator/pressure can tester.
6. * Pasteurizer.
9. Carbonation or Power driver aerated machine or semi-
aeration automatic aerating and sealing machine.
Note - * required for Small Scale and Large Scale units only.