Indian food processing industry: Significance

Food processing contributes about 9-10% of GPD, in Agro-Mfg. sector.

Increasing Employment
it acts as bridge between Agriculture and Manufacturing

Curbing Migration
-Due to unemployment rural-urban migration poor urban planning slum areas

Curbing Food Inflation

-Food inflation has been a major problem
-well-developed food industry + compact supply chain=reduces food inflation via:
-Disintermediation (meaning no middlemen/commission agents)
-less wastage/spoilage of perishable products

Crop-diversification
-In recent years, Government increased Minimum support prices for rice and wheat.
-wheat gets rotten @godowns and railway stations.
-we are importing oil seeds from foreign food processing will divert to produce these products.
then following must be done
Promote food industry with backward linkages to farmers growing fruits, vegetables, milk, fish,
meat, poultry, grain, etc.
Aggressively market the processed food in India + Abroad

Scope/Potential
Abundant Raw Material
India no.1 rank in production of milk, ginger, papaya, guava, mango, buffalo meat
No.2 in rice, wheat etc.
Among type 5 in : oil seeds, coffee, tobacco, spices
Geographical Advantage
Various soil types, diverse climatic conditions for many crops, large coastline, land in c
ultivation is very high
New Demand
Rising income=> demand for healthy food
Youth pop. Increasing=> demand for processed food
Increased diabetes and obesity => healthy food deman.
Govt. Initiatives
Many food processing sectors that are reserved for small and medium scale industries are
de-reserved.
FDI limits relaxed. Export subsidies given
National Mission of Food Processing, Vision 2015 for food processing.
New schemes for mega food parks and cold chains
Many states have reformed their outdated APMC laws.

Obstacles to food processing?

India processes only about 6-7% of its vegetables/fruits-> china >20% , US >60%
So, why low level of food processing in India ??

Economies of Scale
Small processing units because of concessions => small amount of production => less profits
Low marketing skills
Agriculture problems small land holdings, decrease in agricultural land due to urbanisation and
industrialisation.

No brand
High input cost of machinery due to various taxes
Low R & D
Logistics are not good
Low backward and forward linkages
Impact of MSPinterested in production of wheat and rice
High cost of farm inputs
Market information is not adequate
Inconsistency and overlapping of many laws
Low ceilings on subsidies
Lack of trained manpower
Packaging
Low technology
High Packaging Cost
Wastageduring storing and transit.
Lack of Organised Retail
Lack of Food Testing Facilities
--insufficient laboratory , no world class laboratories.
-- our food is not meeting quality standards of US and EU
Lack of Skilled Manpower
- Only few universities are offering courses
Lack of R & D
--Non-thermal technology has to be introduced like in US to preserve the nutrients in the food
-- sterilisation of the food has to be done
-- silicon oxide films that improve oxygen and moisture barriers
Transport Problems
- High traffic on roads delays in transit damage to perishables
-Railways had no cold storages and problem of many stopsdelay
Export Problems
India is the second largest producer of food but less share in export. Why ??
Expensive raw material so high input cost, cost of food is high cannot compete with other
exporters
Low Qualityour food is not meeting the quality standards of US and EU- not meeting Codex,
HACCP quality standards
Poor packagingno good packaging technology
Low processing our processing is stick to only primary processing

Problems with government schemes

-agriculture is a state subject> less coordination b/w centre and states.
- many departments and many schemes are overlapping
--Most schemes have low ceilings as the plant size increases tax concessions decrease and
benefits from govt. also decreases. Our players are not starting big plants. Instead they are starting
no. of small ones to get benefits=> poor economies of scale=> per unit cost is high.
-- Many intermediaries are involving.=> high cost of production and less profits.
-- Inadequate credit availability
-- Panchyati raj institutions, cottage industries, local entrepreneurs are considered irrelevant in the
schemes.
Solution: integrate all the schemes of various ministries into national plan
So, various schemes of Horticulture Board, Agriculture ministry, Food processing ministry are
made under National Mission on Food Processing.

Ministry of Food Processing Industries (MoFPI)

Functions of MoFPI
--to launch National Mission on Food Processing
-- financial aid to food processing industries
-- R&D in food processing
-- enhance processing quality
--food safety and quality assurance
--Strengthening institutions like
National Institute for Food Technology and Entrepreneurship Management
Indian Institute of Crop Processing Technology
National Meat and Poultry Processing Board
2 Missions : Vision 2015 and National Mission on Food Processing
3 Schemes : Mega Food Parks, Modernisation of Abattoirs, Cold Chain Infra.

Vision 2015 Food processing

--by Ministry of food processing in 2005
What
Processing perishable food produce
Value addition to food produce
Indias share global trade

targets by 2015
20%
35 %
3%

National Mission on Food Processing (NMFP)

-launched under 12th plan
-- development of food processing industries with the help of state govts.

Contribution ratio:
Centre

sta

North East

90

10

Except North East

75

25

This national food processing mission has following schemes:

1. Technology Up-gradation / Setting up / Modernization /

Expansion of Food Processing Industries

2. cold chain facilities for Non-Horticultural produces and Reefer
Vehicles
3. Primary Processing Centres/Collection Centres in rural areas
4. Modernization of Abattoirs
5. Modernization of Meat Shops
6. Human Resource Development (HRD)

7. Promotional Activities
8. Up-gradation of Quality of Street Food
#1: Mega Food Parks:
Financial assistance
Category
Northeast
General

%of project cost

75 %
50 %

Maximum of Rs.50 crore per project(land cost not included in the project

Facilities @Mega Food park

Core infrastructure facilities : weighing machines, cold storages, warehouses
Non core facilities : administrative and training institues
Common facilities: irradiation facilities
Basic infrastructure : road connectivity, electricity etc.
Hub and Spoke Model :
One Central Processing Centre
Multiple Primary Processing centres for providing raw materials
SHGs then Field Collecting centres and Primary processing centres and then Central Processing
centre

#2: Cold Chain infra

Full name of scheme: Establishment of Cold Chain, Value addition and Preservation Infrastructure
--minimal processing like threshing, sorting, weighing, pre cooling, cold storage and normal
storage facilities
-- cold storage chain without breaking from farmer to processing centre
--cooling vans for transportation
-- distribution chain

#3: Abattoir modernization

--Establishment of new modern abattoirs
-- modernising existing ones
-- promoting scientific and hygienic slaughtering
-- better by-product utilization.

MoFPI: Misc. Schemes

Indian Institute of Food Technology Entrepreneurship and Management
National Institute of Crop Processing Technology
Setting Up/Upgradation of Food Testing Laboratories

TheFoodSaFeTyandSTandardSacT,2006
To improve quality of food articles.
Food Safety Standards Authority of India
Commissioners of Food Safety at State
R&D
Codex Standards

Set by FAO and WHO to protect the health of the consumers

Reference points for international trade in food items