PROCESSED FOOD FOR THE CHANGED-LIFESTYLE

India leads the world in production of mangoes, potatoes, milk, sesame, safflower, spices, cashew kernels and tea. Hence, India's food processing industry is very large in terms of production, processing, consumption, export and even the growth prospects. The total food market is estimated at Rs 2500 billion, of which value-added products comprise nearly Rs 800 billion. Processed food exports are valued well over Rs 150 billion. It is argued that 20 to 30 per cent of the total produce has still the potential for processing and prolonging of shelf life by increasing the infrastructure facility. India is well placed in terms of fruits and vegetables, whose output is 150 million tonnes. Apart from being the largest producer of milk (91 million tonnes), India ranks second in the production of fruits and vegetables. As these commodities are perishable, the post-harvest losses are very high. The wastage is estimated at more than Rs 500 billion per year. Also, hardly two per cent of the produce is commercially processed. The quantity that perishes in the country is equivalent to the fruit consumption of the UK. India therefore requires a massive thrust to food processing and other agro-based industries. Food processing deserves every encouragement for its high employment potential. It is estimated that around 54,000 persons get direct employment for an investment of Rs 10 billion in the food sector compared to Rs 480 billion in textiles and Rs 250 billion in the paper industry.

A sunrise industry with tremendous potential

The food processing industry generates nearly five jobs (1.27 directly and 3.63 indirectly) for every Rs 100,000 of investment. There would be a fourfold generation of indirect employment in ancillary and other downstream activities on account of the investment in the food sector. Further, 60 per cent of the employment generation is in small towns and rural areas. According to the Ministry of Food Processing, the total investment during the Tenth Plan may be of the order of Rs 521,050 million.

The advent of aseptic packaging or tetrapack has opened up new markets for India. With quality no longer an issue, if the product uses aseptic packaging, the opportunities are tremendous for India. The Rs 3-billion fruit juice industry in the country is growing at the rate of 25 per cent annually and provides employment to lakhs of people in the country. The aseptic packaging industry alone employs around 6000 people. The soft drinks industry in India comprises over 100 plants across the country. At present, there are more han 7 million outlets in the country. The soft drink industry has attracted one of the highest foreign direct investments in the country. Its total export earnings are over Rs 7 billion per annum. India wants to increase its share in the rapidly growing food trade to two per cent by 2015. The government is keen on preparing a comprehensive food processing policy. Through a variety of sops, the new policy would seek to place this sunrise industry on a sound footing. The industry is estimated to have grown to over Rs 1500 billion. The primary aim of the policy is to tap the huge potential arising from India's huge production of vegetables, fruits, food grain, milk, fish and poultry. In fact, by 2006-07, 40 per cent of the Indian population will be a part of the very rich class who will be a strong market for processed food. The demand for ready-to-eat and instant foods is also expected to rise because of changing lifestyles.

Sectoral overview
The Ministry of Food Processing Industries is concerned with a number of food processing industries such as grain processing, meat processing, poultry and egg processing, milk and milk products, fish processing, fruit and vegetable processing, and consumer food.

Grain processing:
Grain processing includes milling of rice, wheat, pulses and oilseeds. Financial assistance is provided for setting up, modernisation or expansion of the units before their commissioning. The thrust is on ensuring disbursal of modern units throughout the country for demonstration and replication keeping in view the recovery loss, non-utilisation of byproducts and energy inefficiency in most of the mills. To ensure that the mills claiming financial assistance use latest and modern technology, the Ministry has embarked on an exercise in which all the existing as well as fresh proposals are scrutinised by technical experts of the committee set up by the Ministry. During the year ending March 31, 2004, the Ministry provided financial assistance to 19 rice mills, ten flour mills, two pulse mills and eleven oil mills.

Cereal-based consumer food:

Cereal-based consumer food includes pasta, breads, cakes, pastries, rusks, buns, rolls, noodles, rice flakes, corn flakes, biscuits, ready-to-eat and ready-to-cook products, coco products, etc. Breads and biscuits constitute the largest segments of consumer foods in India. The Ministry of Food Processing Industries is also providing financial assistance for setting up, modernisation or expansion of consumer industries and approved twelve proposals of cereal-based consumer food companies from April 2003 to March 2004.

Meat and meat processing:

Production of meat and meat products is increasing slowly but steadily from the year 1995 onwards. Meat and meat products are considered to be highly perishable commodities and can transmit diseases from animals to human beings. Production of meat is governed under local bylaws as slaughtering is a state subject and slaughterhouses are controlled by local health authorities.

Processing of meat products is licenced under Meat Food Products Order (MFPO), 1973. MFPO, 1973 has been promulgated under Section 3 of the Essential Commodities Act, 1955 with a view to safeguarding the interests of the meat-eating population so that safe, disease-free and wholesome meat products are made available to them. It could be said to be a type of quality control order regulating production, storage, transportation and marketing of meat food products in the country. Under MFPO, all persons who are engaged in manufacturing of meat food products for sale, except hotels, restaurants, boarding houses, eating houses, etc where meat food products are manufactured for consumption in their respective premises, are required to obtain the MFPO licence.

Dairy processing:
The organised dairy sector accounts for less than 15 per cent of the milk produced in India. The rest of the milk is either consumed at farm level or sold as fresh, non-pasteurised milk through unorganised channel. The share of the organised sector is expected to rise rapidly, especially in the urban regions. India, with its status as the largest milk producer in the world, is on the verge of assuming an important position in the global dairy industry. Many international dairy companies are eyeing India to tap its vast growing market for dairy products. The market for dairy products is likely to witness the fastest growth at 20 to 30 per cent per annum. Nine units have been provided financial assistance under the Plan Scheme of the Ministry.

Fish processing:
With its long coastline of over 8000 km, 50,600 sq.km of continental shelf area and 2.2 million sq.km of exclusive economic zone, India is endowed with rich fishery resources. Considerable infrastructure for processing of marine products has been developed over a period of 50 years. At present, there are over 402 freezing units with a daily processing capacity of 8500 tonnes and 485 frozen storage facilities with a capacity of 109,090 tonnes. Apart from these, there are five surimi units, 13 canneries, and 559 preprocessing unit and dry fish storages. Indian marine products are exported to over 64 countries. Japan is by far the most important market for our marine products in USA, South East Asia and European Union. India is ranked

17th among the marine products exporting countries in the world, though it has a vast coast line of 8000 km and huge fresh water fishery resources. With a view to increasing the exports, the government plans to undertake a comprehensive survey-cum-study and integrated and comprehensive action plan for all the coastal states in fish and fish processing with a special focus on Andaman and Nicobar and Lakshadweep Islands.

Fruits and vegetable processing:

The installed capacity of fruit and vegetable processing industry was 23.28 lakh tonnes as on Jan. 1, 2004. Utilisation of fruits and vegetables for processing in the organised and unorganised sectors is estimated at 2 per cent ofthe total production. Over the last few years, there has been a growth in ready-to-serve beverages, fruit juices and pulps, dehydrated and frozen fruits and vegetable products, tomato products, pickles, convenience veg-spice pastes, processed mushrooms and curried vegetables. There have been fluctuations in production of canned and bottled fruits and vegetable products, and fruit juice concentrates. The domestic consumption of value-added fruits and vegetable products is low compared to the primary processed food in general and fresh fruits and vegetables in particular, which is attributed to higher incidence oftax and duties including that on packaging material, lower capacity utilisation, non-adoption of cost-effective technology, high cost of finance, infrastructural constraints and inadequate farmer-processor linkages leading to dependence upon intermediaries. The smallness of units and their inability for market promotion are the other main reasons for inadequate expansion of the domestic market. To boost fruit and vegetable processing, Ministry of Food Processing Industries (MFPI) is extending financial assistance for setting up new units, modernisation and upgradation of existing units. During 2003-04, an amount of Rs 3.65 crore was approved/sanctioned to 21 such industrial units in ten different states other than North East.

Aerated soft drinks

This industry has attracted foreign direct investments in the country amounting to around Rs 4700 crore and contributes over Rs 1200 crore annually by way of excise duty, sales tax and related

taxes. Soft drinks are the third largest packaged food regularly consumed after packed tea and packed biscuits.

Packaged drinking water

215 companies have been granted licence for manufacturing packaged drinking water, while three companies have been granted licence for manufacturing packaged natural mineral water. The Bureau of Industrial Standards has issued IS 13428:1998 specifications for packaged drinking water.

Alcoholic beverages:
India is the third largest market for alcoholic beverages in the world. The demand for spirits and beer is estimated at 373 million cases. There are twelve joint venture companies having a licenced capacity of 33,919 kilolitres per annum for production of grain based alcoholic beverages. 56 units are manufacturing beer under licence from the government of India with production capacity of 1216 lakh dozen per annum. The demand per annum for wine in the domestic market is estimated to be 6 million bottles (750 mI). Against this, the estimated annual production of wine by the domestic industry is over 2.4 million bottles. The market is estimated to grow at around 25 per cent per annum in the next five years.

But the problems are many

The problems faced by food-processing sector are many. The cost of packaging ranges from 10 to 15 per cent of the production cost. The cold chain capacity caters to less than 10 per cent of the produce and within that the facilities are so rudimentary that over 80 per cent is devoted to potatoes. Regarding credit, even within the priority-sector lending by banks for agriculture, food processing receives only 4.5 per cent of the earmarked credit. The plethora of Indian food laws and food control orders, and lack of coordination among government departments, have been hampering food industry's operations. India suffers from multiplicity of laws, and lack of infrastructure for enforcement is a major problem. Our food laws have been ineffective because of unrealistic food standards and undue emphasis on prosecution and punishment, without sufficient attention to prevention.

There are currently 13 separate laws governing the food processing industry. Indian laws are complex and in certain cases contradictory. Among these, the laws that affect the industry most are the Prevention of Food Adulteration Act, 1954 and the Prevention of Food Adulteration Rules, 1955, which empower the government to lay down standards for food products. Companies say enforcement of these laws is a major problem, with inspectors and courts not distinguishing between labelling offences and serious cases of adulteration. The food processing sector is subject to high incidence of taxation. In 2004, the government proposed an eight per cent duty, which is in addition to the 40 to 42 per cent taxes on process and packaging equipment and 16 per cent excise duty on packaged material. Ironically, India is the costliest when it comes to prices of fruit juices. In countries like China and Pakistan, the duties are 10 to 15 per cent. For the chocolate industry, cocoa is an important ingredient. But, as cocoa is not produced in sufficient quantities in India, it needs to be imported. The customs duty on such imports is 30 per cent. Thus, the local players have to shell out huge sums for such purposes. We need to revise the duty structure on products that are important ingredients for our food processing industry. The Food Processing Policy, 2005 has been criticised. The Bill seeks to ensure quality through excessive controls and elaborate licencing procedures. It is described as draconian-investing wide powers under Section 38 in food inspectors for inspection, search and seizure, with offences being punishable with imprisonment. The government is preparing an integrated legislation. The new law, when approved by the Parliament, would enable constitution of a regulatory authority to oversee and implement food laws. There is a strong case for unifying all the food laws. The new food legislation is required to reduce the regulatory burden on the agricultural sector. The food processing industry is handicapped by infrastructure bottlenecks. The government has to take corrective actions in respect of post-production segments like storage, transportation, handling and processing. Emphasis should be on production of better grades of raw material and establishment of an efficient cold chain that minimises wastage. Source: Facts for you, May 2005