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Food Processing Industry - Challenges and Opportunities
Food Processing industries include all those food items going through two processes
(a) Manufacturing process. If any agriculture, animal husbandry or fisheries product is transformed through a process (involving employees, power. machines or money) in such a way that its original physical properties undergo a change and the transformed product is edible and has commercial value, then it comes within the domain of food Processing Industries.
(b) Other value-addition process: If there is significant value addition (increased shelf life, shelled and ready for consumption) such produce also comes under food processing, even if it does not undergo manufacturing processes.
Food processing encompasses all the steps that food goes through from the time it is harvested to the time it arrives on consumer’s plate.According to Food and Agriculture Organization (FAO), processed foods can be classified into three types viz. Primary, Secondary and Tertiary.
In the field of Food Processing India has certain unique advantages like diverse soils and climatic zones, long coastline, traditional knowledge base etc.
The global processed food industry is estimated to be valued around USD 3.4 trillion and accounts for three-fourth of the global food sales. The global food industry is ever changing and evolving. However, health, convenience and value continue to be the key value propositions in this industry. However, only 6 percent of processed foods are traded across borders compared to 16 percent of major bulk agricultural commodities. The United States and European Union together account for over 60 percent of total retail processed food sales in the world.
Trade liberalization policies through multi-lateral and regional trade agreements have led to a rapid growth in food processing. In the Asian region, Japan is the largest food processing market, but India and China are likely to grow at a faster rate in the next decade
Food processing industry ranks as the 5th largest industry in India in terms of production, consumption and exports. It employs over 16 percent of total workforce in organised manufacturing sector and 32 percent in unorganised manufacturing sector. It employs 13 million people directly and- 35 million people indirectly. It has the potential to generate significant employment as the multiplier effect of investment is 2.5 times than in other industries. This industry is dominated by unorganized sector which contributes more than 70 percent of output in. value and 50 percent in volume. Total bank credit deployed is 6 percent of total gross credit deployed across all industry segments. Indian food processing industry stands at $135 billion and is estimated to grow with a CAGR of 10 per Cent to reach $200 billion by 2015.
The food processing industry in India is large and includes segments such as agriculture, horticulture, plantation, animal husbandry and fisheries.
Segment
Products
Dairy
Pasteurized and packed milk, Whole milk powder, Skimmed milk powder, Condensed milk, Ice cream, Butter, Ghee and Cheese etc
Fruits and Vegetables
Beverages, Juices, Concentrates, Pulps, Slices, Frozen and Dehydrated products, Potato Wafers/Chips, etc.
Grains and Cereals
Flour, Bakeries, Starch Glucose, Cornflakes, Malted Foods, Vermicelli, Beer, Grain based alcohol
Fisheries
Frozen and Canned products mainly in fresh form
Meat and Poultry
Frozen and packed-mainly fresh form
Consumer Foods
Snack food, Namkeens, Biscuits, Ready to eat food, Alcoholic and Non-alcoholic beverages
The food processing industry is one of the largest industries in India -- it is ranked fifth in terms of production, consumption, export and expected growth. It employs over 16 percent of total workforce in organised manufacturing sector and 32 percent in unorganised manufacturing sector. It employs 13 million people directly and- 35 million people indirectly. This industry is dominated by unorganized sector which contributes more than 70 percent of output in. value and 50 percent in volume. Total bank credit deployed is 6 percent of total gross credit deployed across all industry segments. Indian food processing industry stands at $135 billion and is estimated to grow with a CAGR of 10 per Cent to reach $200 billion by 2015. Processed food market accounts for 32 per cent of the total food market. It accounts for US$ 29.4 billion, in a total estimated market of US$ 91.66 billion.. According to the Confederation of Indian Industry (CII) the food-processing sector has the potential of attracting US$ 33 billion of investment in 10 years and generate employment of 9 million person-days.
Food processing Industry offers distinct benefits to both the producers as well as processors. The following changes in the market conditions reaffirm the potential for the sector.
1) Increasing food and grocery spending - 53 % total consumption expenditure on retail and grocery in rural areas and 40% in urban areas.
2) Rapid growth in organized retail- due to change in lifestyle and higher incomes which will lead to more demand and sale for processed food products so a catalyst for the food industry
3) Consumer trend towards convenience food and ‘enjoying life’ driven by change in demographic pattern -Median age of Indian population is 24 years and nearly 65 % of population is below 35 years of age, leading to Explosive demand of convenience foods, value-added foods and eating-out
4) Rising income-levels -Increasing willingness to pay premium for healthy and quality processed products so more demand for processed food products
5) More women in the workforce- percentage of working women as a percentage of total population has increased to 25% which translates to more demand for convenience food.
6) Global shift to outsourcing from India across products/ services including food
High-margin businesses possible in niche export markets (e.g. organic foods, herbal products)
Producers have to meet stringent export requirements that leads to Quality improvement, which spill-over to domestic markets resulting in availability of better quality food products in india
7) De-regulation and liberalization of the Indian economy- It’s easy to bring in global technology, know-how and investments resulting in ease of entry for new businesses and capacity addition
8) Changes happening on the supply side - In addition to the demand side, there are changes happening on the supply side with the growth in organised retail, increasing FDI in food processing and introduction of new products.
9) Central government has given a priority status to ail agro-processing businesses – which is boosting growth, Government incentives in the field of mega food parks, cold chain and exports benefits are also playing an important role in promoting food processing.
The Eleventh Rive Year Plan marked a major departure in terms of overriding focus on this industry. This is reflected not only by way of nearly a seven-fold hike (over Rs. 4000 crores) in outlays for this industry, as compared to the 10th year plan (Rs.650 crores) but also by launching a flagship scheme called Mega Food Parks along with various other initiatives as follows:
(a) Establishment of' cold chain, value addition and preservation infrastructure
(b) Promotional activities like seminars/workshops/studies/surveys/exhibition/fairs advertising publicity
(c) Scheme for technology upgradation
(d) Scheme for human resource development
(e) Entrepreneurship development programme
(f) Food processing training centre
(g) Scheme for R and D and upgradation of food testing laboratories
(h) Scheme for upgradation of Street food quality
(i) Scheme for strengthening of institutions
(j) Modernization of Abattoirs
(k) Modernization of meat shops
(j) Food Processing is major component of Make in India.
MEGA FOOD PARKS SCHEME (MFPS)
Mega Food Parks Scheme (MFPS) was approved by the government in September 2008 and has the following objectives:
Objectives Of The Mega Food Parks Scheme
Salient Features
Expected Outcome Of The Mega Food Parks
Role Of State Government
An outlay of over 15,000 crores has been earmarked for this sector during the plan. The most significant initiative during 12th Plan is launching of a National Mission on Food Processing (NMFP). This would be a paradigm shift in Ministry’s approach and is driven by the need to make food processing truly a national initiative.
It is also fully, realized that unless State Governments become implementing agencies of Ministry’s varies Schemes and programmes there would remand a limitation on size and depth of Ministry’s programmes.
The success achieved by initiatives like National Horticulture Mission also suggests that Ministry may adopt a similar approach to reach farmers and small entrepreneurs. The NMFP is thus guided by twin principles of Decentralization and Outreach.
The Mission seeks to make India a global leader in production, consumption and export of safe, hygienic, nutritious and quality processed food-Items by enhancing processing levels, value addition and reduction in wastage, institutional strengthening, food safety and quality assurance and capacity building. The targets of the Mission are:
(i) Increasing the levels of Processing of perishables from 6 percent to 20 percent
(ii) Value addition from 20 to 30 percent
(iii) Increasing share of India in global food trade from 1.5 to 3 percent
(iv) Skill development to the tune of 1.5 million
Objectives Of NMFP
(a) To spread the message of significance of food processing for enhancing agricultural productivity and farmers’ income in the country.
(b) To assist the State Governments in creating requisite synergy between their agricultural plans and development and food processing sector.
(c) To assist the State Governments in addressing both Institutional and Infrastructural gaps along the value chains and thus create efficient supply chains for agriculture produce.
(d) To promote initiative, for skill development, training and entrepreneurship which would meet needs of both post-harvest management and food processing industry.
(e) To, assist MSMEs in setting up/modernization of food processing units by providing need based support in terms of capital/technology/skill etc.
(f) To assist food processing industry to meet requisite standards in terms of food safety laws and market demand, both domestic and international.
Five Guiding Principles of the Mission:
(a) Organizing the unorganized food processors, including Self-Help Groups, to help them reap advantages of Mission initiatives.
(b) Ensuring advantages of programmes/Schemes/institutions/infrastructure of NMFP reach Micro and Small Enterprises on preferential basis.
(c) Dedicated, professional, sensitive and accountable support structure to initiate and implement the Mission initiatives in a transparent manner.
(d) Mission initiatives to be shaped and driven by proposed beneficiaries.
(e) Adoption of best practices for scaling up programmes/initiatives.
All these schemes would be implemented as centrally sponsored schemes or through additional central assistance route by giving responsibility of implementation to the state governments. The mission would operate at National, State and District levels.
The Central Sector Scheme - SAMPADA (Scheme for Agro-Marine Processing and Development of Agro-Processing Clusters) was approved by the cabinet in May 2017 for the period of 2016-20 coterminous with the 14th Finance Commission cycle. The scheme has now been renamed as the "Pradhan Mantri KisanSampada Yojana (PMKSY)".
It is an umbrella scheme incorporating ongoing schemes of the Ministry like Mega Food Parks, Integrated Cold Chain and Value Addition Infrastructure, Food Safety and Quality Assurance Infrastructure, etc. and also new schemes like Infrastructure for Agro-processing Clusters, Creation of Backward and Forward Linkages, Creation / Expansion of Food Processing & Preservation Capacities. Under PMKSY the following schemes are to be implemented.
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