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Sansad TV: Food Processing Sector in India-Vision 2030

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Introduction:

World Food India was organized by the Ministry of Food Processing Industries at Pragati Maidan, New Delhi. Representatives from more than 75 countries around the world participated in this event. Food processing sector is one of the important areas of development and has been accepted as a high priority industry by the Government of India and the reason for this is because this sector has shown immense potential for employment and investment in the country. It is also believed that India’s annual domestic consumption will quadruple by 2030, making it the fifth largest consumer region in the world.

  • Food processinggenerally includes the basic preparation of foods, the alteration of a food product (usually raw) into another form (as in making preserves from fruit), and preservation and packaging techniques.
  • Food processing typically takes harvested crops or animal products and uses these to produce long shelf-life food products.

Significance of the food processing industries:

The Food Processing Industry (FPI) is of enormous significance as it provides vital linkages and synergies that it promotes between the two pillars of the economy, i.e. agriculture and industry.

  • Employment Opportunities: Food processing industries can absorb a major share of workers from the agriculture sector, who face disguised unemployment. It can lead to better productivity and GDP growth.
  • Doubling of farmers’ income: With contract farming, farmers can get better technological inputs from industries as well. There is income security and proportionate value for produce. They are also protected against price shocks.
  • Crop-diversification: Food processing will require different types of inputs thus creating an incentive for the farmer to grow and diversify crops.
  • Farmer Beneficiaries: The SAMPADA scheme is estimated to benefit about 37 lakh farmers and generate about 5.6 lakh direct/ indirect employment (ES 2020 data).
  • Curbing Distress Migration: Provides employment in rural areas, hence reduces migration from rural to urban. Resolves issues of urbanization.
  • Prevents Wastage: Nearly one-third of the food that is produced each year goes uneaten, costing the global economy over $940 billion as per report by World Resources Institute (WRI)
    • India is biggest producer of numerous fruits and vegetable. Most of these are perishable and have very low shelf life. This is the major reason for high percentage of wastage. Their shelf life can be increased through food processing.
  • Value Addition: Products such as tomato sauce, roasted nuts, de-hydrated fruits are in high demand.
  • Reduce malnutrition: Processed foods when fortified with vitamins and minerals can reduce the nutritional gap in the population.
  • Boosts Trade and Earns Foreign exchange: It is an important source of foreign exchange. For e.g. Indian Basmati rice is in great demand in Middle Eastern countries.
  • Make in India: Food processing is one of the six superstar sectors under the GoI’s, Make in India initiative and has the potential to transform India as a leading food processing destination of the World.
  • Curbing Food Inflation: Processing increases the shelf life of the food thus keeping supplies in tune with the demand thereby controlling food-inflation.
    • For e.g. Frozen peas/ corn are available throughout the year.
    • Similarly, canned onions under Operation Greens can achieve price stability.

Challenges facing food processing industry in India

  • Demand of processed food is mainly restricted to urban areas of India.
  • Major problems are listed below:
    • Small and dispersed marketable surplus due to fragmented holdings
    • Low farm productivity due to lack of mechanization,
    • High seasonality of raw materials
    • Perishability and lack of proper intermediation (supply chain) result in lack of availability of raw material.
    • This in turn, impedes food processing and its exports.
  • More than 30% of the produce from farm gate is lost due to inadequate cold chain infrastructure.
  • The NITI Aayog cited a study that estimated annual post-harvest losses close to Rs 90,000 crore.
  • Lack of all-weather roads and connectivity make supply erratic.
  • The food processing industry has a high concentration of unorganised segments, representing almost 75% across all product categories. Thus, causes the inefficiencies in the existing production system.
  • Further, most processing in India can be classified as primary processing, which has lower value-addition compared to secondary processing.
  • Due to this, despite India being one of the largest producers of agricultural commodities in the world, agricultural exports as a share of GDP are fairly low in India relative to the rest of the world.

Solutions to address the challenges

  • The Ministry of Food Processing Industries (MoFPI) is implementing PMKSY (Pradhan Mantri Kisan SAMPADA Yojana). The objective of PMKSY is to supplement agriculture, modernize processing and decrease agri-waste.
    • Mega Food Parks.
    • Integrated Cold Chain, Value Addition and Preservation Infrastructure.
    • Creation/Expansion of Food Processing/Preservation Capacities.
    • Infrastructure for Agro Processing Clusters.
    • Scheme for Creation of Backward and Forward Linkages.
  • Foreign Direct Investment (FDI) policy: FDI up to 100%, under the automatic route is allowed in food processing industries.
  • Agri Export Zones: To give thrust to export of agro products, new concept of Agri Export Zones was brought in 2001. APEDA has been nominated as the Nodal Agency to coordinate the efforts
    • cluster approach of identifying the potential products;
    • the geographical region in which these products are grown;
    • Adopting an end-to-end approach of integrating the entire process right from the stage of production till it reaches the market (farm to market).

Conclusion

  • Food processing has a promising future, provided adequate government support is there. Food is the biggest expense for an urban Indian household.
  • About 35 % of the total consumption expenditure of households is generally spent on food. As mentioned, food processing has numerous advantages which are specific to Indian context.
  • It has the capacity to lift millions out of undernutrition. Government has its work cut out to develop industry in a way which takes care of small scale industry along with attracting big ticket domestic and foreign investments.