Dynamics of Horticulture-based Agro-Industrialization in India:

A Prelude to Revolution in the Agro-Food Sector*

Sanjib Mukhopadhyay1 and Subhendu Chakrabarti2

Introduction:
Since the inception of liberalized economic policy the entire socio-economic scenario of
India has been changing very fast. While India’s GDP grew at an annual rate of about 6 per cent
over the few last decades, agricultural growth declined to a mere around 2 per cent over the same
period. Obviously, agricultural share in GDP has declined to 18 per cent whereas the share of
service sector (mainly due to spectacular growth in IT sector) has increased to more than 53
percent. The share of industrial sector also outpaced agricultural sector. However, despite
declining share of agriculture in the economy, about 46 per cent of India’s geographical area is
used for agricultural activities and about 58 per cent of country’s workforce is employed, directly
or in-directly, in agricultural and allied activities (CSO, 2007).
The declining profitability of rice cultivation and the changing patterns of food demand in
the rapidly growing cities of Asia call for a transformation of food production systems in India.
The rice sector in Asia is facing the dual challenge of sustaining high rates of rice productivity
growth while at the same time transforming itself from a subsistence oriented monoculture
system to a diversified market oriented system. FAO/World Bank study on farming systems and
poverty (Pingali, 2004) has also suggested that diversification is the single most important source
of poverty reduction for small farmers in South and Southeast Asia. In fact, sustained increases
in per capita incomes of about 4 percent per year during the past two decades, consumption
patterns in India have been changing away from cereals to high-value agricultural products.
These dramatic changes indicate a structural shift in Indian diets. Add to this the new export
market opportunities for many of the same products, owing to trade liberalization, and there is a
happy match between the demands of the market and the need for farmers to diversify into
higher-value activities. Further, high-value agricultural products have higher employment
elasticity and can be suitable for smallholders.
Under the present liberalized Indian economy, the primary objectives before the planners and
the policy makers are to maintain a steady growth of food grain production to feed the growing
population and at the same time generate employment opportunities. Industrialization is the only
means to generate greater employment opportunities and on the other, a steady growth in
agricultural production requires investment in agricultural sector. Agriculture-led-
industrialization might be the best strategy to achieve these twin objectives and that in turn
necessitate agricultural diversification.

1
Professor, Dept. of Agril. Economics, Bidhan Chandra Agril. University (BCKV), West Bengal, India
2
Associate Scientist, Economic Research Unit, Indian Statistical Institute, Kolkata
* Paper presented at the International Conference on Agribusiness in Emerging Economics, January 6-7, 2016 at
IRMA, Anand, Gujarat, India

Electronic copy available at: http://ssrn.com/abstract=2714411

 Some scholars argued that economic underdevelopment is the outcome of a massive
coordination failure, in which investments do not occur simply because other complementary
investments are not made, and these latter investments are not forthcoming simply because the
former are missing. If the actions of all concerned could somehow be coordinated, the economy
might be able to move to a desired level of equilibrium. However, if individuals act
independently, they may not be able to affect the switch in a coordinated way. To break such
coordination failures, the concept of linkages is important because linkages have a bearing on
policy. If one activity fosters appropriate conditions for another, then it is said to be a link
between the two activities. In the sphere of production, this relationship is visualized in terms of
forward and backward linkages. A forward linkage lowers the cost of production for another
activity; on the other hand, a backward linkage raises the demand for another activity. From the
point of view of the sector that benefits from the linkage, a backward linkage directly raises the
price of its output, stimulating higher production or supply. A forward linkage reduces the price
of one of its inputs of production.
In the present liberalized economic regime, the market forces are governing all the policy
decisions. As a result, the policy makers realized the need to formulate market demand driven
strategies, which will ensure that our agricultural produces find national and international
markets and good remunerative prices are available to farmers. The inherent challenge is to make
demand driven diversification in agriculture and to tie up production and productivity patterns
with markets and end users. The potential of the horticulture sector emanates from its ability to
generate more man-days, more income and greater employment opportunities. Moreover, having
diverse agro-climatic regions, India has great comparative advantage in the production of various
horticultural crops whose enhanced production would create scope for export earnings. However,
in reality the comparative advantage of Indian horticultural sector is greatly diminished with
respect to the issue of price-competitiveness. Indian horticultural products lose their competitive
edge, due to various factors, such as inefficient and lengthy supply chains, sanitary and
phytosanitary requirements, wastages, inability of small and marginal farmers to undertake risk
due to the lack of institutional support etc.
Under the above circumstances, the present study is an endeavor to examine the potential and
performance of horticulture in India and tries to evaluate to what extent small and marginal
farmers are accommodating this changing scenario. In doing this the study undertakes to assess
the performance of the states across the country in terms of area under and growth of
horticultural crops mainly vegetables, flowers and fruits. More specifically, it is to assess the
potential and performance of high-valued agricultural production in India.

Objective of the study:
The primary objectives of the present study are:
1. to evaluate the performance of the states of India in terms of area, production and
productivity of horticultural crops over time.
2. to assess the extent of participation of small famers in the changing horticulture-

Electronic copy available at: http://ssrn.com/abstract=2714411

 centric cropping pattern across states.
3. to examine the extent of value addition to horticultural crops in both organized and
unorganized sectors of Indian states over time.

Data & Methodology:

The present study is confined to vegetables, flowers and fruits only. The data used in this study
are taken from the available different issues of Indian Horticulture Database; Ministry of Agriculture,
Government of India. Due to unavailability of required data on horticultural crops, data from other
sources like Agricultural Census, Central Statistical Organization (CSO) are also incorporated in
this study in order to justify our objectives. In order to explore the processing status of states the
data published by Annual Survey of Industries (ASI) have been used. It is observed that the gross
cropped area varies significantly within and between states. Therefore, to judge the performance
in terms of area under seasonal horticultural crops, it would be a better estimate if the area under
different horticultural crops is expressed as percentage of Gross Cropped Area (GCA) rather than
absolute area under horticultural crops. In case of fruits, this exercise was not deemed suitable
due to perennial nature of the crops. Mostly simple statistical techniques are used to analyze the
data. Regression analysis (OLS) has been made to assess the extent of participation of small
famers in the changing horticulture-centric cropping pattern across states. To evaluate the extent
of value addition in food processing industries in the states and union territories of India, during
the period of 2005-06 to 2012-13 we considered the value of output and net value added of food
processing industries of the respective states. The nominal values of output and net value added,
are converted into constant prices, deflating by All India food processing sector’s whole price
index.
I. State wise Performance of Horticultural crops in terms of area and production in India
In the following we are presenting the performance of vegetables, flowers and fruits by
the Indian states in terms of area and production. In order to depict the performance of Indian
states in terms of area and production of horticultural crops we confined ourselves in vegetables,
flowers and fruits due to scarcity of data availability.

A. Vegetables:
It is observed that vegetables are grown in all Indian states and Union territories. Average
area under vegetables as a percentage of GCA appears to be significantly higher in the
comparatively smaller states and Union territories, e.g. Delhi (80.40%), Andaman & Nicobar
Islands (28.71%), Mizoram (18.17%), Sikkim (17.27%), Jharkhand (16.75%) and Lakshadweep (12.21%)
(see table-1). This may happen due to small size of grossed cropped area in these states/UTs or
cereal production is not much remunerative to the farmers of these states/UTs. Again, there are
only four states e.g. West Bengal (13.83%), Meghalaya (13.57%), Bihar (10.97%) and Tripura

3
(10.74%) where more than 10 percent of their respective gross cropped area are allocated to
vegetables.

Table 1: Scenario of Vegetable Cultivation in India by States and UTs (2006-07 to 2013-14).

Average Area as Avg. Average Production Avg. (Y-

(Y-Y) Y)
Productio
Growth in ‘000 Growth
STATES/UT % of All n as % of
% of GCA Rate of MT Rate of
India All India
area as Producti
Area Average
% GCA on
Andaman & Nicobar 28.71 0.06 17.66 34.38 0.03 15.01
Andhra Pradesh 3.18 5.25 9.29 7105.18 5.65 13.80
Arunachal Pradesh 4.41 0.15 -12.77 62.57 0.05 3.20
Assam 7.19 3.44 -2.05 3203.16 2.55 -0.42
Bihar 10.97 10.06 -0.25 12953.23 10.30 1.66
Chhattisgarh 5.61 3.85 10.25 3518.83 2.80 10.78
Dadra & Nagar Haveli 4.71 0.01 0.33 5.44 0.00 -5.52
Delhi 80.40 0.41 -2.79 482.47 0.38 -4.96
Goa 4.16 0.08 -0.45 64.57 0.05 -5.32
Gujarat 3.72 5.53 3.90 7672.14 6.10 8.48
Haryana 4.85 3.79 6.36 3868.80 3.08 8.36
Himachal Pradesh 7.94 0.91 4.32 1238.82 0.99 5.64
Jammu & Kashmir 5.45 0.75 1.16 1181.00 0.94 4.70
Jharkhand 16.75 3.09 13.09 3413.26 2.71 3.07
Karnataka 3.43 5.19 2.41 6375.31 5.07 8.40
Kerala 5.68 1.88 0.16 3086.57 2.45 0.24
Lakshadweep 12.21 0.00 10.09 7.92 0.01 848.51
Madhya Pradesh 1.63 4.27 16.44 5814.22 4.62 30.07
Maharashtra 2.27 6.17 9.93 6621.70 5.27 10.87
Manipur 6.00 0.21 9.70 169.91 0.14 20.72
Meghalaya 13.57 0.51 -2.68 354.41 0.28 5.97
Mizoram 18.17 0.22 157.73 132.18 0.11 44.04
Nagaland 3.90 0.21 27.32 140.76 0.11 45.62
Orissa 9.90 8.00 8.68 7781.60 6.19 2.39
Pondicherry 7.01 0.03 15.23 36.56 0.03 17.84
Punjab 2.22 2.12 3.02 3022.46 2.40 6.39
Rajasthan 0.64 1.80 3.24 843.78 0.67 8.66
Sikkim 17.27 0.28 4.34 104.22 0.08 8.31
Tamil Nadu 4.67 3.29 3.22 7254.73 5.77 4.07
Tripura 10.74 0.43 3.13 466.72 0.32 10.80
Uttar Pradesh 3.59 11.04 -0.39 17080.71 13.58 1.39
Uttaranchal 7.04 1.00 3.35 920.04 0.73 1.33
West Bengal 13.83 15.95 1.92 20317.85 16.16 3.26
All India 4.24 100.00 2.90 138119.47 100.00 4.91
Source:Indian Horticulture Database (of different years). National Horticulture Board, Govt. of India

Out of 29 Indian states only 18 states (Andhra Pradesh, Assam, Bihar,Chhattisgarh, Gujarat,
Haryana, Jharkhand, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Orissa, Punjab, Rajasthan,
Tamil Nadu, Uttar Pradesh, Uttaranchal and West Bengal)showed significant share of area under
vegetable crops to all India GCA. Over the period 2006-07 to 2013-14West Bengal (15.95%)
ranks the top in terms of share of the area under vegetables to all India GCA and that followed

4
by Uttar Pradesh (11.04%), Bihar (10.06%), Orissa (8.00%) and Maharashtra (6.17%) (see table-
1).
Average year-to-year growth of area under vegetable cultivation as percentage of GCA over
the period 2006-07 to 2013-14 is more than 10 percent in Andaman & Nicobar (17.66%),
Chhattisgarh (10.25%), Jharkhand (13.09%), Lakshadweep (10.09%), Madhya Pradesh (16.44),
Mizoram (157.73%), Nagaland (27.32), Pondicherry (15.23%). This growth is nearly 10 percent
in Andhra Pradesh (9.29%), Maharashtra (9.93%) and Manipur (9.70%). Again, it appears that in
Arunachal Pradesh, Assam, Bihar, Delhi, Goa, Meghalaya and Uttar Pradesh have experienced a
negative growth of area under vegetable cultivation as percentage of GCA over the same period.
However, there is 2.90% growth of all India area under vegetable cultivation as percentage of all
India GCA (see table-1).

Now, if we look at the average production of vegetables per yearduring the period 2006-07 to
2013-14 of the states/UTs we find that as an obvious outcome the states which rank first four
positions in terms of share of area under vegetables cultivation as percentage of GCA have
maintained their respective ranks in terms of average production also; e.g. the average
production of vegetables (in ‘000 MT) over the period 2006-07 to 2013-14 in West Bengal
appears to be 20317.85 followed by Utter Pradesh 17080.71, Bihar 12953.23 and Orissa
7781.60. The same trend is being maintained with regard to vegetable production of respective
states when compared as percentage of All India average. However, it has been observed that the
states of West Bengal (16.16%), Utter Pradesh (13.58%), Bihar (10.30%), Orissa (6.19%) and
Gujarat (6.10%) have registered as significantcontributors to All India vegetable production. The
year-to-year growth rate of All India vegetable production is registered at 4.91 percent. A
negative growth rate of production has been observed for the states experiencing a negative
growth of area under vegetable cultivation except, Arunachal Pradesh, Bihar and Utter Pradesh.
This implies that the productivity of vegetables has increased in these above-mentioned states.

Graph 1: Vegetable Area as percentage of GCA

90
80
70
Percentage

60
50
40
30
20
10
0

5
 160.00 Graph 2: Growth of Vegetable Area as percentage of GCA
140.00

120.00

100.00
PERCENTAGE

80.00

60.00

40.00

20.00

0.00

-20.00

Graph 3: Vegetable Produc@on as % of All India Produc@on

18.00
16.00
14.00
Percentage

12.00
10.00
8.00
6.00
4.00
2.00
0.00

6

PERCENTAGE

0.2
0.3
0.4
0.6

0
0.1
0.5
0.7
0.8
Nagaland
Bihar
Rajasthan
Punjab
Jammu & Kashmir
Madhya Pradesh
UGar Pradesh
Assam
Himachal Pradesh
Jharkhand
Maharashtra
Mizoram
ChhaOsgarh
Haryana
Orissa
Gujarat
Sikkim
UGranchal
Graph 4: Flower Area as % of GCA

Andaman & Nicobar

Andhra Pradesh
Karnataka
West Bengal
Arunachal Pradesh
Tamil Nadu
Pondicherry

7
B. Flowers:
It has been observed that flower cultivation is not being carried out in all the states and
UTs of India (e.g. Goa, Kerala) and the cultivated area,as percentage of GCA appears to be very
small compared to that of vegetables area.Flowers are produced in two different forms – cut and
loose. In India, flowers are mostly used for the religious and social ceremonial purposes.
Production of cut and loose flowers of a state or union territory depends on its socio-religion
environment. For that reason in the Christian dominated North-eastern states like, Arunachal
Pradesh, Nagaland and Mizoram produce either only cut flowers or cut flowers with insignificant
amount of loose flowers.

Table 2: Scenario of Flower Cultivation in India by States and UTs (2006-07 to 2013-14)

Avg. (Y-Y) Growth Rate

Average Area as Avg. (Y-Y) Avg. Production per yr. of Production
% of Growth
% of All Rate of Loose Cut
STATES/UT GCA India Area ('000 MT) (lakh nos.) Loose Cut
Andaman & Nicobar 0.11 0.01 * 1.27 0.52 -18.32 @
Andhra Pradesh 0.20 31.77 18.16 163.34 2960.68 17.69 *
Arunachal Pradesh 0.26 0.36 * 0.00 1775.78 * -47.24
Assam 0.06 1.26 * 4.29 423.97 * *
Bihar 0.01 0.22 39.69 4.48 210.51 18.35 -7.64
Chhattisgarh 0.09 2.69 28.95 14.57 0.00 -18.99 @
Delhi 13.52 2.82 2.46 5.70 923.33 0.00 0.00
Gujarat 0.10 6.20 10.35 82.01 3300.78 26.36 -10.59
Haryana 0.09 3.03 2.66 56.57 853.96 15.54 1085.43
Himachal Pradesh 0.07 0.35 10.01 12.86 780.83 712.07 18.60
Jammu & Kashmir 0.03 0.18 55.67 0.70 131.81 250.67 27.39
Jharkhand 0.08 0.58 279.18 14.73 990.06 0.00 0.00
Karnataka 0.21 13.28 6.18 195.51 5993.03 4.42 -2.42
Madhya Pradesh 0.04 4.25 27.08 62.43 0.00 329.79 @
Maharashtra 0.08 8.78 13.43 92.41 5704.44 12.37 -0.16
Mizoram 0.08 0.04 * 37.60 168.10 * 67.16
Nagaland 0.00 0.00 * 0.00 20.00 @ 70.33
Orissa 0.09 2.62 66.98 16.98 2627.07 134.51 -47.75
Pondicherry 0.74 0.13 -26.71 1.91 14.40 13.34 @
Punjab 0.02 0.75 10.36 48.12 0.02 203.96 @
Rajasthan 0.01 1.64 0.04 4.29 0.00 15.75 @
Sikkim 0.10 0.07 4.92 7.63 110.42 -34.38 36.02
Tamil Nadu 0.55 16.16 13.81 261.35 196.82 7.44 @
Uttar Pradesh 0.05 5.98 10.98 20.79 3300.57 17.84 -7.51
Uttranchal 0.10 0.59 15.87 1.23 2150.59 31.57 18.26
West Bengal 0.24 11.39 5.88 55.15 17770.14 5.86 2.19
All India 0.10 100.00 8.76 1170.47 49533.77 14.95 1.10
Note: * implies insufficient/ insignificant data, @ implies no cultivation
Source: Indian Horticulture Database (of different years); National Horticulture Board, Govt. of India

Flowers being a seasonal crop, we estimated area under flower cultivation as percentage of
GCA of the respective states and UTs over the period 2006-07 to 2013-14 to judge the
performances of the states and UTs. We observed that Delhi (13.52%) tops the rank in terms of

8
average area of flower cultivation as percentage of GCA followed by Pondicherry (0.74%),
Tamil Nadu (0.55%), Arunachal Pradesh (0.26%) and West Bengal (0.24%). However, looking
at the percentage share of the respective states and UTs to the all India average area of flower
cultivation, it appears that Andhra Pradesh (31.77%) tops the rank, followed by Karnataka
(13.28%), Tamil Nadu (16.16%), West Bengal (11.39%) and Maharashtra (8.78%) (see table-2).

Due to insufficient and or poor quality of available data, growth rate of area under flower
cultivation cannot be estimated for most of the states of North-Eastern region. However, it has
been observed that except Pondicherry (-26.71%),allother the states and UTs have experienced a
significant year-to-year growth of area under flower cultivation over the period of 2006-07 to
2013-14. More than 10 percent growth of area under flower cultivation has been observed in 14
out of 23 flower growing states of India and among them Bihar, Chhattisgarh, Jammu and
Kashmir, Jharkhand, Madhya Pradesh and Orissa have experienced more than 27% growth of
area under flower cultivation.The all India average year-to-year growth of area under flower
cultivation over the same period appears to be 8.76% (see table-2).

From the point of view of flower production, Tamil Nadu tops the rank (261.35 thousand
MT) with respect to average per year production of loose flowers and that followed by Karnataka
(195.51thousand MT), Andhra Pradesh (163.34 thousand MT), Maharashtra (92.41thousand MT)
and Gujarat (82.01 thousand MT). However, with respect to the production of cut flowersWest
Bengal (17770.14) tops the rank,followed by Karnataka (5993.03 lakh nos.), Maharashtra
(5704.44 lakh nos.), Gujarat (3300.78 lakh nos.), Uttar Pradesh (3300.57 lakh nos.) and Andhra
Pradesh (2960.68 lakh nos.).The all India average production of loose and cut flowers per year
during the period 2006-07 to 2013-14 appears to be 1170.47 thousand MT and 49533.77 lakh.
nos. respectively (see table-2).

Although, Himachal Pradesh ranked 13th in terms of average production of loose flowers per
year during 2006-07 to 2013-14, but it ranked the top (712.07%) in terms of the growth of loose
flower production. With respect to the growth of loose flower production Madhya Pradesh
(329.79%) comes next to Himachal Pradeshfollowed by Jammu and Kashmir (250.67%), Punjab
(203.96%) and Orissa (134.51%). The all India average growth of loose flower production
appears to be 14.95%.It appears that Andaman and Nicobar Island, Chhattisgarh, and Sikkim
experienced negative growth of loose flower production over the same period. However,
Arunachal Pradesh, Bihar, Gujarat, Karnataka, Maharashtra, Orissa and Uttar Pradesh have
experienced negative growthwith respect to cut flower production. The average growth of all
India production of cut flowers has appeared to be very small (1.10%) as compared to the growth
of loose flower production (14.95%) (see table-2).

9

-50
0
50
100
150
200
250
'000 MT 300

0
50
100
150
200
250
300
Jammu & Kashmir
UGranchal
Andaman & Nicobar
Pondicherry
Assam
Rajasthan
Bihar
Delhi
Sikkim
Himachal Pradesh
ChhaOsgarh
Jharkhand
Orissa
UGar Pradesh
Mizoram
Punjab
West Bengal
Haryana
Madhya Pradesh
Gujarat
Graph 6: Produc@on of Loose Flower

Maharashtra
Graph 5: Growth of Flower Area as % GCA

Andhra Pradesh
Karnataka
Tamil Nadu

10

Lakhs

0
5
10
15
20
25
0
2000
4000
6000
8000
10000
12000
14000
16000
18000

ChhaOsgarh
Madhya Pradesh
Rajasthan
Punjab
Andaman & Nicobar
Pondicherry
Nagaland
Sikkim
Jammu & Kashmir
Mizoram
Tamil Nadu
Bihar
Assam
Himachal Pradesh
Haryana
Delhi
Jharkhand
Arunachal Pradesh
UGranchal
Graph 8: Fruit Area as % of All India Area

Orissa
Andhra Pradesh
Graph 7: Produc@on of Cut Flower

UGar Pradesh
Gujarat
Maharashtra
Karnataka
West Bengal

11
FRUITS:

Fruits are grown in all states and UTs of India. However, from the production point of
view, different kind of fruits are grown with great emphasis in different parts of the country in
conjunction withmatching with their respective agro-climatic characteristics.

Table 3: Scenario of Fruits Cultivation in India by States and UTs (2006-07 to 2013-14)

Avg. Area As % of Avg. (Y-Y) Avg. As % of Avg. (Y-Y)

under All India Growth Production All India Growth
STATES/UT cultivation Area Rate of per Year Production Rate of
per Year Area (‘000 MT) Production
('000 ha) (%)
Andaman & Nicobar 3.11 0.05 2.81 25.90 0.04 6.21
Andhra Pradesh 801.03 12.79 -0.11 10883.09 15.29 4.62
Arunachal Pradesh 69.60 1.11 7.37 176.33 0.25 24.12
Assam 128.00 2.04 3.58 1666.92 2.34 5.21
Bihar 291.80 4.66 1.09 3674.72 5.16 3.68
Chhattisgarh 141.46 2.26 16.29 1120.42 1.57 4.40
Goa 11.08 0.18 1.13 103.44 0.15 -1.48
Gujarat 332.30 5.31 4.16 6651.30 9.34 7.21
Haryana 40.38 0.64 8.25 354.50 0.50 11.69
Himachal Pradesh 205.81 3.29 2.46 623.09 0.88 25.74
Jammu & Kashmir 269.82 4.31 12.48 1720.66 2.42 7.69
Jharkhand 61.81 0.99 22.04 642.46 0.90 -1.36
Karnataka 335.62 5.36 5.36 5613.49 7.88 5.94
Kerala 320.94 5.12 1.55 2585.34 3.63 0.64
Lakshadweep 0.30 0.00 -2.38 0.95 0.00 -4.05
Madhya Pradesh 115.30 1.84 23.05 2975.89 4.18 25.18
Maharashtra 1486.79 23.74 1.71 10693.29 15.02 4.30
Manipur 45.48 0.73 10.38 329.36 0.46 14.61
Meghalaya 31.34 0.50 2.99 277.52 0.39 6.05
Mizoram 33.41 0.53 17.81 226.76 0.32 41.96
Nagaland 23.46 0.37 25.23 185.06 0.26 60.99
Orissa 294.59 4.70 4.08 1782.52 2.50 5.95
Pondicherry 1.11 0.02 -10.55 28.50 0.04 -11.67
Punjab 66.19 1.06 5.10 1224.12 1.72 9.78
Rajasthan 36.28 0.58 7.18 554.57 0.78 5.65
Sikkim 12.39 0.20 9.01 19.01 0.03 8.72
Tamil Nadu 303.48 4.85 3.30 7411.80 10.41 5.72
Tripura 44.18 0.71 9.96 599.97 0.84 5.55
Uttar Pradesh 330.70 5.28 4.04 4820.16 6.77 11.04
Uttaranchal 180.02 2.87 1.01 727.11 1.02 0.31
West Bengal 204.21 3.26 3.30 2826.21 3.97 3.14
All India 6263.38 100.00 3.88 71193.26 100.00 6.19
Source:Indian Horticulture Database (of different years). National Horticulture Board, Govt. of India

12
 Graph 9: Growth Rate of Fruit Area
30
25
20
15
10
5
0
-5
-10
-15

Graph 10: Fruit Produc@on as % of All India Area

16
14
12
10
8
6
4
2
0

13
 Graph 11: Growth Rate of Fruit Produc@on
70
60
50
40
30
20
10
0
-10
-20

In order to reveal the performance of the states and UTs of Indiain terms of area and
production of fruit crops, we consider absolute area under fruits crops instead of area as
percentage of GCA because fruit crops are perennial in nature. In terms of average area under
fruits cultivation, Maharashtra (1486.79 thousand hector) tops the rank among the states and UTs
of India. Andhra Pradesh (801.03 thousand hector) comes next to Maharashtra and that followed
by Karnataka (335.62 thousand hector), Gujarat (332.30 thousand hector) and Uttar Pradesh
(330.70 thousand hector). The all India average area under fruits cultivation per year appears to
be 6263.38 thousand hectare over the period 2006-07 to 2013-14. In comparison with the states
of India, the area under fruit cultivation appears to be much smaller in the union territories like
Andaman and Nicobar Island (3.11 thousand hector), Lakshadweep (0.30 thousand hector) and
Pondicherry (1.11 thousand hector) (see table-3).

The average year-to-year growth of area under fruits cultivation is happened to be highest
in Nagaland (25.23%),followed by Madhya Pradesh (23.05%), Jharkhand (22.04%), Mizoram
(17.81%) and Chhattisgarh (16.29%). In Andhra Pradesh (-0.11%), Lakshadweep (-2.38%) and
Pondicherry (-10.55%) the annual growth of area underfruits cultivation have appeared negative.
The all India annual average growth of area under fruits cultivation has also registered a growth
of 3.88% (see table-3).

While looking at the performance of states and UTs in terms production of fruits it is
observed that in spite of having negative annual growth of area under fruits cultivation Andhra
Pradesh (10883.09 thousand MT) tops the rank in terms of annual average production of fruits.
Maharashtra (10693.29 thousand MT) comes next to Andhra Pradesh and that followed by Tamil
Nadu (7411.80 thousand MT), Gujarat (6651.30 thousand MT) and Karnataka (5613.49 thousand
MT). It has been observed that in Andaman and Nicobar island (25.90 thousand MT),
Lakshadweep (0.95 thousand MT), Pondicherry (28.50 thousand MT) and Sikkim (19.01

14
thousand MT) the annual production of fruits are very small. However, the all India average
production of fruits per year is registered as 71193.26 thousand MT (see table-3).

In terms of growth of annual production of fruits, Nagaland (60.99%) tops the rank
among the Indian states and UTs. Mizoram (41.96%) comes next and that followed by Himachal
Pradesh (25.74%), Madhya Pradesh (25.18%) and Arunachal Pradesh (24.12%). On the other
hand, Goa (-1.48%), Jharkhand (-1.36%) and Pondicherry (-11.67%)have registered negative
growth of production of fruits. The growth rate of all India annual production of fruits is
appeared to be 6.19% over the period 2006-07 to 2013-14 (see table-3).

I. Extent of participation of small famers in the changing horticulture-centric

cropping pattern across states
It appears that the secondary sources of data do not provide adequate information
regarding the nature and extent of small and marginal farmers’ participation in terms of area and
production of horticultural crops. Therefore it becomes very difficult to justify horticulture as an
alternative source of livelihood for the farmers in general and small and marginal farmers in
particular. In spite of such data constraints, in this paper we have tried to explore whether small
and marginal farmers across states of India do opt for horticultural crops as an alternative source
of livelihood in this changing horticulture-centric cropping pattern.
To depict the relationship we have considered linear regression models.In this regard, we
assume that the propensity to consume high-valued food products increases with rising income.
We also assume that infrastructure facilities particularly rural roads have positive impact on
production of horticultural crops. Keeping all these in mind, we have constructed the following
variables.
Dependent variables:
i) Average growth of area under vegetables as percentage of gross cropped area (AGV)
ii) Average growth of area under flowers as percentage of gross cropped area (AGF)
iii) Average growth of area under fruits (AGFr)

Independent variables:
i) Average growth of number of marginal farmers by state (AGMr)
ii) Average growth of number of small farmers by state (AGS)
iii) Average growth of number of medium farmers by state (AGM)
iv) Average growth of number of large farmers by state (AGL)
v) Average growth of per capita income by state (AGPCI)
vi) Average growth of human development index (AGHDI)
vii) Average growth of length of rural roads by state (AGRR)
viii) Average growth of road density by state (AGRD)
At the outset we have estimated the correlations between our variables which are
depicted in the following correlation matrix.

15
 It is quite evident from the above correlation matrix that the overall correlation between
variables appears to be very insignificant. However, we have observed that the average growth of
area under vegetables bears highly significant correlation (0.993) with the growth of large
farmers. One interesting point to note here that the growth of marginal and small farmers is
highly correlated (0.583) which may indicate that the process of marginalization is on.

CORRELATION MATRIX
AGV AGF AGFr AGMr AGS AGM AGL AGPCI AGHDI AGRR AGRD
AGV 1
AGF -0.037 1
AGFr 0.423* 0.376 1
AGMr 0.323 -0.220 0.103 1
AGS 0.113 -0.248 0.223 0.583** 1
AGM 0.012 -0.224 0.174 0.369 0.838** 1
AGL 0.993** -0.159 0.356 0.335 0.220 0.223 1
AGPCI -0.138 -0.402* -0.354 0.065 0.346 0.465* -0.059 1
AGHDI -0.257 0.455* -0.022 -0.264 -0.295 -0.342 -0.036 -0.064 1
AGRR -0.049 -0.189 -0.293 -0.080 -0.341 -0.290 -0.082 0.077 -0.053 1
AGRD 0.013 -0.138 -0.123 -0.138 -0.368 -0.268 -0.037 -0.035 0.046 0.917** 1
* Implies correlation is significant at 0.05 level (2-tailed)
** Implies correlation is significant at 0.01 level (2-tailed)
Again we have noticed that the growth of overall road density has high significant
correlation (0.917) with the growth of rural roads which indicates an improved urban-rural
connectivity.However, we surprisingly notice that the average growth of rural roads bears a
negative, though insignificant, relationship with the growth of area under horticultural crops.
This may imply that horticulture crop production has not been given proper emphasis as an
alternative source of livelihood in all the states of India. The development of rural road
infrastructure thus might be helping rural people to look for other non-agricultural activities.
The OLS estimates of the dependent variable AGFr does not bear any significant
relationship with any of the above stated independent variables and for that we omitted its
outcome. However,theOLS estimates of AGV and AGF (dependent variables) with respect to the
independent variables AGMr, AGS, AGM, AGL, AGPCI, AGRR, AGRD are presented below.
AGV = -11.046 + 0.131AGMr + 0.959AGS –1.241AGM + 0.513AGL+ 0.191AGPCI–1.491AGRR + 1.781AGRD
(-0.920) (0.478) (2.029**) (-4.039*) (15.889*) (1.121) (-1.774**) (1.820**)
Adjusted R2 = 0.917 and Durbin-Watson (DW) = 2.228
AGF= 19.633 + 0.163AGMr + 0.311AGS –0.963AGM – 0.150AGL– 0.199AGPCI–14.838AGRR+16.873AGRD
(0857) (0.228) (0.273) (-1.202) (-2.240**) (-0.609) (-9.267*) (9.017*)
Adjusted R2 = 0.811 and Durbin-Watson (DW) = 1.899
(values in the parentheses indicate t-values and * and ** indicate significant at 1% and 10% level)

It appears that the growth of area under vegetable cultivation as percentage of GCA bears
a positive significant relationship with the growth of small and large farmers. However, this
relationship,in case of the growth of marginal farmers, though appears to be positive but not
significant. This implies that small and large farmers are trying to diversify their cropping pattern

16
in favour of horticultural crops. The motives behind these two classes of farmers might be
different in nature. Large farmers are in the intention of commercialization of their produces
while the small farmers are attemptingto meet their cash needs. The positive but insignificant
relationship between the growth of marginal farmers and that of vegetable area may imply that
the present institutional infrastructures of the respective states do not encourage them to
undertake high valued horticultural crops as their alternative livelihood activities.Instead, the
improvement of rural-urban connectivity drives them to go for non-agricultural activities in the
informal sectors for their subsistence. This is implied by the fact that there is a significant
negative relationship between the growth of rural roads and the growth of area under vegetables.
This is also supported by our earlier findings stated above. The positive significant relationship
between the growth of road density and the growth of area under vegetable cultivation signifies
that the overallimprovement of rural-urban connectivity would help boosting horticulture-centric
cropping pattern in the respective states.

On the other hand, we observe that the growth of area under flowers (AGF) bears a
positive but insignificant relationship with the growth of marginal and small farmers. This may
happen due to comparatively less capital intensiveness as well as less risky nature of flower
cultivation than that of vegetable cultivation. However, the negativesignificant relationship
between AGF and the growth of large farmers implies that the large farmers are not much
interested to go for flowercultivation commercially.This may be due tonon-availability of
required infrastructure for enhancing the shelf-life of lowers. However, we observe that the
relationships between AGF and the growth of rural roads (AGRR) as well as road density
(AGRD) bear the similar kind of relationshipsthatpersist between AGV and AGRR and
AGRD.This only implies that the overall improvement of rural-urban connectivity would help
boosting floriculture in the respective states. It appears from the above relationship that
floriculture is insignificantly confined to small and marginal farmers only and this may be due to
their subsistence level of farming.

The above discussion is primarily based on vegetables and flower cultivation only. In
order to justify the dynamics of horticulture-centric cropping pattern, the various other
horticultural crops are to be considered as well. However, the present exercise reveals the
potential and the performance as well as trends and existing constraints of size-class biasness of
horticulture-based cropping across the states of India. Unless adequate and proper institutional
supports are made available to small and marginal farmers, horticulture might not be feasible as
an alternative livelihood activity.

II. Extent of value addition to horticultural crops in Indian states over time
Our primary intension was to estimate the extent of value addition to horticultural crops in both
organized and unorganized sectors of India by states over time. But due to non-availability of
requisite data and as an alternative we confined our discussion to the extent of value addition in the
food processing industries in India by states and UTs over the periods 2005-06 to 2012-13. We hope

17
 that this picture would provide some idea of the extent of value addition to horticultural crops. In this
regard we have considered the total value of output and net value added of the food processing
industries as our reference of observation. The nominal values of total output and net value added are
converted into constant prices to reveal the overall scenario of the value addition in the food
processing industries.

With respect to annual average value of output of the food processing industries, the state of
Maharashtra tops the rank with Rs.53684.63 lakhs as total output value. Next comes Utter Pradesh
(Rs.40064.92 lakhs) followed by Andhra Pradesh (Rs.39590.18 lakhs), Gujarat (Rs.37058.32 lakhs)
and Tamil Nadu (Rs.26677.03 lakhs). It is observed that the food processing firms in all the states of
India have contributed positive impact to the industry (see table-4).

As a percentage contributor to the value of output of Indian food processing industries, the
above top five ranking states have maintained their respective ranks in terms of their share in the all
India value of output over the period 2005-06 to 2012-13. For example Maharashtra contributes
15.24% of all India output value, followed by Utter Pradesh (11.38%). Andhra Pradesh (11.24%).
Gujarat (10.52%) and Tamil Nadu (7.58%)

However, while considering the growth of output value in food processing sector of the
respective over the period under study, Meghalaya tops the rank (47.21%). followed by Manipur
(33.98%), Himachal Pradesh (29.79%), Jharkhand (25.38%) and Chhattisgarh (24.57%). It is
interesting to note here that smaller states are coming up very fast in the race of development of food
processing industries. The overall all India growth of output of food processing industries registered
at 11.17% (see table-4).

Looking at the net value added by the food processing sector of the respective states, we find
that Maharashtra (Rs.4931.97 lakhs) again tops the rank with more than 15 percent share of the All
India output, followed by Karnataka (Rs.3411.32 lakhs), Andhra Pradesh (Rs.3330.39 lakhs), Uttar
Pradesh (Rs.3099.05 lakhs) and Tamil Nadu (Rs.2717.47 lakhs). The overall net value added by the
food processing industries in India turns out to be Rs.72083.96 lakhs per year over the period under
study. It appears that in terms of net value added, Karnataka revealed much proficiency among the
states of India.

Again, it is observed that Maharashtra (6.84%) occupies the top rank in terms of all India
contribution to net value added by the food processing industries. Karnataka (4.73%) comes next to
Maharashtra and that followed by Andhra Pradesh (4.62%), Uttar Pradesh (4.30%) and Tamil Nadu
(3.77%).

In fact, the state of Maharashtra, Uttar Pradesh, Andhra Pradesh, Tamil Nadu, Gujarat and
Karnataka together contribute more than 63 percent of annual total value of output and nearly 28
percent of annual net value added of the food processing sector in India (see table-4).

18
 Table 4: Extent of Value Addition in Food Processing Industries in India by States and
UTs (2005-06 to 2012-13)

Total Output Net Value Added

(at constant prices ) (at constant prices )
Average % of Growth Average % of Growth
State/ UTs Value All (%) Value All (%)
(in Lakh Rs.) India (in Lakh Rs.) India
Andaman & Nicobar Islands 5.51 0.002 2.62 -1.53 -0.002 -327.19
Andhra Pradesh 39590.18 11.242 6.54 3330.39 4.620 4.05
Assam 5825.86 1.654 7.34 889.57 1.234 14.38
Bihar 2856.12 0.811 22.72 251.94 0.350 32.72
Chhattisgarh 3977.23 1.129 24.57 267.44 0.371 28.66
Dadra & Nagar Haveli 267.34 0.076 -19.73 108.62 0.151 -16.93
Delhi 6881.22 1.954 17.83 586.93 0.814 22.51
Goa 1422.19 0.404 7.88 448.69 0.622 10.42
Gujarat 37058.32 10.523 12.77 2489.52 3.454 28.15
Haryana 14965.62 4.250 21.76 1637.60 2.272 22.73
Himachal Pradesh 1862.08 0.529 29.79 425.04 0.590 49.62
Jammu & Kashmir 1234.84 0.351 22.05 112.22 0.156 31.64
Jharkhand 790.69 0.225 25.38 117.43 0.163 61.17
Karnataka 24734.32 7.024 12.16 3411.32 4.732 14.77
Kerala 9624.60 2.733 6.11 998.02 1.385 18.89
Madhya Pradesh 21965.23 6.237 14.47 1908.38 2.647 38.10
Maharashtra 53684.63 15.244 10.90 4931.97 6.842 8.22
Manipur 54.84 0.016 33.98 3.77 0.005 478.42
Meghalaya 71.23 0.020 47.21 17.76 0.025 129.58
Nagaland 31.44 0.009 0.76 2.45 0.003 27.74
Orissa 3325.17 0.944 10.96 416.63 0.578 34.01
Pondicherry 1064.92 0.302 3.61 248.07 0.344 164.03
Punjab 17644.01 5.010 11.78 2460.69 3.414 23.15
Rajasthan 13246.53 3.761 14.31 1404.94 1.949 62.29
Sikkim 86.22 0.024 6.80 17.65 0.024 6.65
Tamil Nadu 26677.03 7.575 11.08 2717.47 3.770 8.85
Tripura 131.28 0.037 3.92 23.93 0.033 8.28
Uttar Pradesh 40064.92 11.377 10.42 3099.05 4.299 9.17
Uttaranchal 5476.42 1.555 23.22 1240.77 1.721 64.97
West Bengal 14810.62 4.206 14.95 1166.11 1.618 20.37
All India 352164.43 100.00 11.17 72083.96 100.00 120.70
Source: Annual Survey of Industries (different issues), Ministry of Statistics &Programme Implementation, Govt. of India

While looking at the growth of net value added by the respective states, we find that Manipur
tops the rank (478.42%), followed by Meghalaya (129.58%), Pondicherry (164.03%), Uttaranchal
(64.97%) and Rajasthan (62.29%). Once again it appears that in terms of growth of value of output as
well as net value added, the performance of food processing industries in the smaller states are really
commendable over the study period. The overall all India growth of net value added turns out to be
120.7 percent and this high rate of net value added might be considered to be an indicator of the
extent of value addition to horticultural crops.

19
Summary and Concluding Remarks
Continuous fragmentation of land, high cost of inputs and unjustified low price of produced
outputs make cultivation of cereal based traditional crops non-profitable to the farmers in general
and small and marginal in particular. Added to these, the increasing trend of health awareness of
the people and rising per capita income over the last few decades hasreduced the overall cereal
consumption in India. At this juncture, the primary objectives of the planners and the policy
makers are to maintain a steady growth of food grain production to feed the growing population
and at the same time generate income and employment opportunities in rural India. All these
factors call for diversification of agriculture to meet the objectives of income and employment
generation in the rural sector. Scholars have established that the high valued horticultural crops
are most suitable for the small size of landas well as cost effective. Moreover, horticultural crops
are more amenable to processing and thereby generating scopes for agro and food processing
industries opening the avenues for agriculture-industry interface. Thus, cultivation of
horticultural crops appeared to have several advantages from economic stand point apart from
being more suitable for small and marginal farmers.

The present study examined the performance of the horticultural sector mainly vegetables,
flowers and fruits across states of India in terms of area allocated to gross cropped area,
production and their growth over the period 2005-06 to 2012-13. It attempted to examine
whether size class of holdings, rural roads, per capita income have any role in the expansion of
area and production of horticultural crops. The study explored the performance of food
processing sectors in India in terms of their total output and net value added. All these are being
carried out to explore whether or to what extent horticulture can be gainfully utilized to enhance
the livelihood of small farmers in India, in the changing context of food demand pattern, trade in
the world market, rising income of the urban middle class, marginalization of holdings and
depletion of natural resource base (particularly water) of grain crops. The major findings of the
study are: (a) grain crops still dominate the cropping pattern in India agricultural scenario; (b)
high valued horticultural crops are coming up very fast across the states. The eastern and north-
eastern states are leading in this respect; (c) although, the improved rural roads connectivity
helps the small and marginal farmers to undertake cultivation of high-valued crops but due to
lack of needed institutional and infrastructural support they are unable to cultivate horticultural
crops, instead, the improved road connectivity has given them an opportunity to undertake non-
agricultural activities in the urban areas.

Overall, the study reveals that India’s has enormous potential for horticultural crops and its
performance, in terms of growth of area and production, is very commendable. The horticultural
and food processing sector have the potential to enhance the income and employment generation
in the farming sector and could be an alternative livelihood for the small and marginal farmers.
Hence, if taken into account of the increasing demand for horticultural crops both in Indian and
international markets, just institutional and infrastructural support such as proper storage, price
support, collectivization, efficient supply chain etc., would generate an agro-processing
revolution through a horticultural boom in Indiain the near future. The prelude of the boom has

20
already been started and the revolution in the agro-food sector is just a matter of time.

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