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1.4
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A long supply chain also means that each level of the supply chain is oblivious of the requirements of the next level. As a result, there is no premium for good quality produce or for superior handling practices. Hence, there is no incentive or choice for the farmer to invest in high quality inputs and in adopting the best agronomic practices. |
| 1.5 |
High prices of processed foods deter increase in consumer demand for such foods. Processors find it difficult to procure adequate quantity and appropriate quality of raw materials at the right price. This has a cascading effect on their business, as they are unable to honour their marketing commitments. Subsequently capital for day-to-day running of the business becomes scarce, vitiating the viability of the business itself. |
| 1.6 |
Raw materials used by Agro Industries have some fundamental differences vis-a-vis traditional manufacturing industries leading to uncertainty in projections and high risk perception.
Seasonality : The ground and tree crops, fisheries and live stocks undergo a reproduction cycle. Therefore, agro industries have to procure the required raw materials only in the season, while the processing operations and demand for their products are round the year.
Perishability : The agro industries process perishable raw materials and so require greater speed and higher cost in handling and storage. |
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