Food Processing Industry: Food Based Industry versus Non- Food Based; Location, Upstream, Downstream Requirements.

Food Processing Industry: Location, Upstream, Downstream Requirements

Food Based Agro-processing Industry versus Non- Food Based Agro-Processing Industry

Upstream versus Downstream Food Processing Industries.

Potential for Food Processing Industry in India

Advantages of the Food Processing Industries

Factors Determining Location of Food Processing Industries

There are, however, few exceptions:

  • For most grains (cereals), shipment of the raw material in bulk is frequently easier, while many bakery products are highly perishable and thus require production to be located close to the market.
  • Oilseeds (except for the more perishable ones such as olives and palm fruit) are also an exception and can be transported equally easily and cheaply in raw form or as oil, cake or meal, so there is more technical freedom of choice in the location of processing.
  • The same is true for the later stages of processing of some commodities. For example, while raw cotton loses weight in ginning, which is consequently carried out in the producing area, yarn, textiles and clothing can all be transported equally easily and cheaply.

Technical and Exports Considerations in deciding location

  • Where there is a high degree of technical freedom in the choice of location, industries have frequently tended to be located in proximity to the markets because of the more efficient labour supply, better infrastructure and lower distribution costs in the large market centres.
  • With production for export, this factor has often tended to favour the location of processing in the importing country. This tendency has been reinforced by other factors, including the need for additional raw materials and auxiliary materials (particularly chemicals) that may not be readily available in the raw material-producing country; the greater flexibility in deciding the type of processing according to the end use for which the product is required; and the greater regularity of supply and continuity of operations that are possible when raw materials are drawn from several different parts of the world.
  • However, with improved infrastructure, enhanced labour efficiency and growing domestic markets in the developing countries, there is increased potential for expanding such processing in the countries where the raw materials are produced.
  • In addition, with growing liberalization of world trade, more developing countries will be able to take advantage of lower labour costs to expand their exports of agro-industrial products.


Himanshu Arora
Doctoral Scholar in Economics & Senior Research Fellow, CDS, Jawaharlal Nehru University


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