ROLE OF FOOD

PROCESSING INDUSTRIES
IN AGRIBUSINESS
Presented By Sarita Das
(Lecturer)
Food Processing Sector in India
India has huge supply advantages due to diverse agro-climatic conditions and wide ranging raw material
base…

• 52% cultivable land

• Largest livestock
compared to 11%
population
world average

• All 15 major
• Largest producer of
climates in the world
milk
exist in India

Significant Opportunity
• 46 out of 60 soil • Largest producer
types exist in India cereals
India as a global sourcing
hub
• Second-largest fruit
• 20 agri-climatic
and vegetable
regions
producer
• Sunshine hours and
day length are • Among the top five producers worldwide
ideally suited for of rice, wheat, groundnuts, tea, coffee,
round the year tobacco, spices, sugar and oilseeds.
cultivation
 Food Processing Sector in India
Huge wastage across the supply chain leads to lower level of processing and hence low value addition…
Producer

Field Losses Developing

(Pest, Diseases, Rodents etc)) Countries –
Relatively
Pre-Processing high losses
(e.g. inefficient harvesting, drying, milling) in the initial Level of Processing across Segments
parts of the
value chain Segment India Other Countries
Transport
(e.g. spillage, leakage) US A (65 %),
Fruits and Philippines (78%)
2.2%
Vegetables
Storage China (23)%;
(e.g. technical deficiencies)
Marine 26%
Rich
60-70% in developed
Processing & Packaging Countri Poultry 6%
countries
(e.g. excessive peeling, washing) es –
Buffalo Meat 20%
High
losses at 60-75% in developed
Marketing Milk 35%
a later countries
(e.g. spoilage, rotting in stores)
stage in
the food
Consumer

Wastage by Consumer chain

(e.g. overeating, food wastage)

Field
Industry Growth Drivers - Demand
Urbanisation, rise in disposable incomes and changing lifestyle and aspirations are leading to significant
demand for processed food…

Increasing spends on
health foods

Increasing Urbanisation Increasing Nuclear

– Lifestyle and Families and Working
Aspirations Women

Food Processing
Demand Drivers

Changing demographics
Demand for Functional
– Rise in disposable
Foods
incomes

Organised Retail and

Private Label
Penetration
Industry Growth Drivers - Policy
Supportive Policy, in light of the significant employment and trade potential, to boost the quantity and
quality of output in the sector is also driving growth in the sector…
Infrastructure Development
• Mega Food Parks
• Integrated Cold Chain
Food Processing Industry
development
Infrastructure
Upgradation
Technology
Laboratory, R&D
Food testing
Quality Control/
Development
Institutional
HR and
Policy Support
Technology Upgradation Quality Control/ R&D HR and Institutional
• Setting up a network of Development
• Grant of 25% of the cost laboratories • Financial assistance to set
of plant & machinery and up training centres
technical civil (maximum • Higher level of assistance
of Rs 50 lakhs in general to research institutes • Establishment of
areas and Rs 75 lakhs in • Assistance for organising NIFTEM
difficult areas) promotional activities • Strengthening of State
• 50-100% subsidy to Nodal Agencies
private companies/state • IT
governments, which set
up quality testing
laboratories
SWOT ANALYSIS OF AGRO- PROCESSING
INDUSTRIES

 Strengths
1. Round the year availability of raw materials.
2. Social acceptability of agro-processing as
important area and support from the central
government.
3. Vast network of manufacturing facilities all over
the country.
4. Vast domestic market.
Weakness
 Weaknesses
1. High requirement of working capital
2. Low availability of new reliable and better accuracy
instruments and equipments
3. Inadequate automation w.r.t. information management.
4. Remuneration less attractive for talent in comparison to
contemporary disciplines.
5. Inadequately developed linkages between R&D labs
and industry
Opportunities
1. Large crop and material base in the country due to
agro-ecological variability offers vast potential for agro
processing activities.
2. Integration of developments in contemporary
technologies such as electronics, material science,
computer, bio-technology etc. offer vast scope for rapid
improvement and progress.
3. Opening of global markets may lead to export of our
developed technologies and facilitate generation of
additional income and employment opportunities.
Threats
1. Competition from global players
2. Loss of trained manpower to other industries and
other professions due to better working conditions
prevailing there may lead to further shortage of
manpower.
3. Rapid developments in contemporary and
requirements of the industry may lead to fast
obsolescence.
Challenges in the Sector
Challenge 1: Productivity Issues

India's overall agriculture productivity is still low…

Source: Innovative technology to ensure food security, UNI (United News of
India), 25 March 2009
Challenges in the Sector
Challenge 2: R&D

Key Problems in Indian R&D

Commodity-centric R&D Lack of a holistic approach involving a matrix of farm enterprises

Compartmentalization of Lack of effective bilateral flow of information amongst research, extension,

R&D agencies and implementation departments

Poor validation and Lack of large-scale on-farm validation of techniques and feedback thereon,
feedback mechanisms leading to practically no scope for enhancement

A seven-step mechanism is required to set-up a research-development-technology transfer continuum involving all

stakeholders
1. Problem identification and prioritization

2. Convergence of existing technologies to match the need

3. Generation of need-based viable technologies using the holistic farming system approach

4. On-farm assessment and evaluation

5. Feedback on the technologies
6. Refinement of technologies, if necessary
7. Ensuring timely availability of inputs
 Challenges in the Sector
Challenge 3: Human Resource Development

12
The industry is in dire need of highly skilled/trained manpower across different levels to handle various operations

• Emphasize food safety in storage conditions

• Training in Warehousing and Distribution

Industry level Regulatory

• Managerial and and trade
Operational level HRD issues
• Platform to make policy
decisions
Warehousing &
Distribution
• Inclusion in academic
curriculum
• Food safety awareness Enforcement Food production

• Auditing and inspection

skills • Institutional Development
• Process development • Focus on packaging techniques, storage and safe
transportation
Challenges in the Sector
Challenge 4: Supply Chain Hindrances

Necessity for a Strategic focus on Supply Chain in FPI

Seasonality Seasonal production Vs Year-round Processing Operations

Perishability Highly perishable nature of raw materials

Variability Variable quality of raw materials due to cyclic variations and changing weather conditions

• This situation discourages processing units to reach optimum size and achieve
economies of scale.

• Additionally, lack of consistent quality hinders small scale units to build brand equity
for themselves in international and domestic markets.
Challenges in the Sector
Challenge 5: Low Adherence to Quality Standards

Increasing need for food processors to adhere to quality standards for both domestic as well as export market

Increasing Globalisation Stringent Safety Norms Rising Customer awareness on Quality and Health

• Lack of requisite controls across the agri-value chain-from farm inputs to storage
of produce to food processing techniques

• Poor compliance to requisite food standards in export countries

• Absence of basic standardization and certification infrastructure

Opportunities & Recommendations
Food Processing sector has strong synergies with the inclusive growth mandate of the government and also
provides a platform to significantly transform the face of rural India…

A developed Food Processing sector will help overcome the biggest challenges in front of India:

• Low farmer income and high subsidies

• High wastage along the value chain

• Poor hygiene and safety standards

Given the huge potential opportunity, players should consider the constraints as opportunities waiting
to be exploited and make investments for the overall growth of the industry.
Opportunities
High domestic demand and supportive policy provides significant opportunities across the Food Processing
value chain…

Po licy Support

Retail/
Marketing / Lo gis tics
Farm Inputs Farm ing Pro ce s sing Fo o d Co ns um e r
Ag g re g ato r (Fo o d)
Se rvice s

Product De sig n

Distributio n

Financial & Bus ine s s Transport Se rvice s/ Marke ting

Quality Control Marke t Inte llige nce
Se rvice s Infras tructure

Food Safety
Mega Food Parks Quality Control Labs
Management Systems
Key Joint Research
Integrated Cold Chain Training Facilities
Opportunities Facilities

Backward and Customised Farm

B2B Sales
Forward Integration Equipment
Recommendations
Recommendations for the Food Processing Industry in India

Promote Nutrition Processable variety

Foods of Crops

Increase
Support Backward Promotional
Integration A Dynamic Activities
Food
Processing
Industry
Investment in
Market Access to
Hard/Soft
farmers
Infrastructure

Technology Harmonisation of
Upgradation Taxes
PLAN AND STRATEGY
 The objectives of agro-processing programmers
in India should be to:
 - minimize product losses,
 - add maximum value,
 - achieve high quality standards,
 - keep processing cost low,
 - ensure that a fair share of added value goes to the
producer
To achieve the objective by the strategy

 National plan for improvement and extension of agro-

processing technology at farm, traditional small industry
and modern industry levels should be prepared. The plan
should take into account the diversity in resources and
needs of different regions in the Country. It should
include program- me details and implementation
schedule for the first four or five years. The progress of
plan implementation should be periodically reviewed to
allow adjustments and corrective measures, and to
develop programme details for the years beyond the
period under review
 Emphasis should be put on the establishment of
new agro-industrial plants in the production
catchments to minimize transport cost, make use
lower cost land and more abundant water supply,
create employment opportunity in the rural sector
and utilize process waste and by-products for feed,
irrigation and manure.
 Infrastructure in the production catchments selected
for agro-industrial development should be
improved. Because of uncertain grid power supply
to rural areas, decentralized power generation using
locally available resources may become an integral
part of agro-industrial development. Similarly, if
the raw materials and processed products are
perishable or semi perishable in nature, cold chain
will have to be established
 The national plan should provide for management
of agro-industrial activities in the catchment area,
both by private companies and individuals as well
as cooperatives.
 Financial incentives and support should be
provided on liberal scale to promote the
modernization of agro-processing industry and for
establishing new such industries in production
catchments.
 Arrangements to supply market information to the
farmer and agro-processor should be put in place.