Food processing revolution needed

The time has come to increase the private sector participation in all areas of agricultural research and development as well as in the food processing space, according to Prime Minister Narendra Modi.

 Food processing:

Food processing is the transformation of raw ingredients into food, or of food into other forms (ie. food processing may denote direct manufacturing of food or value addition on existing food). Food processing typically takes harvested crops or butchered animal products and uses these to produce long shelf-life food products.

Significance:

• Food processing sector in India is a composite sector comprising two broad segments viz. organized and unorganized segments.
• There are an estimated 25-lakh micro food processing enterprises in the country, which are unorganized and unregistered. With 7% of investment in plant & machinery, the unorganized enterprises contribute of 74.3% of employment (a third of which are women), 12% of output and 27% of value addition in the food-processing sector. Nearly 66 per cent of these units are located in rural areas and about 80 per cent of them are family-based enterprises.
• The organized sector5 with nearly 40,000 units accounts for 93% of the plant & machinery in the sector, in value terms. This segment accounts for 26% of employment and contributes around 90% of output and 72% GVA
• The Indian food processing industry has remarkable capability to grow, considering the still promising levels of processing currently. Though India’s agricultural production base is practically strong, wastage of agricultural produce is large.

Goals and Roles:

A strong and dynamic food processing sector plays a vital role in reduction in the wastage of perishable agricultural produce, enhancing shelf life of food products,ensuring value addition to agricultural produce, diversification &commercialization of agriculture, generation of employment, enhancing income of farmers and creating surplus for the export of agro & processed foods. In the era of economic liberalization, all segments including; private,public and co-operative sectors have defined roles to play and the Ministry promotes their active participation.

The Ministry of Food Processing Industries has a clear goal of attaining these objectives by facilitating and acting as a catalyst to attract quality investments from within India and abroad into this sector with the aim of making food processing a national initiative.With this overall objective, the Ministry aims to:

• Enhance farmer’s income by better utilization and value addition of agricultural produce
• Minimize wastage at all stages in the food processing chain by the development of infrastructure for storage, transportation and processing of agro-food produce;
• Introduce of modern technology into the food processing industries from both domestic and external sources;
• Encourage R&D in food processing for product and process development and improved packaging;
• Provide policy support, and support for creation of Infrastructure, capacity expansion/ Upgradation and other supportive measures form the growth of this sectors;
• Promote export of processed food products.

Food processing revolution – Challenges:

· Availability of raw materials

· Storage Constraints

· Transportation Issues

· Technological equipment

· High competition

Government Initiatives:

• Recognising the role that FPI can play in promoting employment and income in the rural sector, the Government of India has identified it as a priority sector under the ‘Make in India’ Programme.
• FPI offers an opportunity to reduce dependence on agriculture in the rural areas as the main employment generating sector.
• Various initiatives have been taken by the Government to promote this sector considering the challenges faced by the sector.
• The Ministry of Food Processing Industries has identified six key challenges faced by the food processing industry: (i) gaps in supply chain infrastructure (i.e., lack of primary processing, storage and distribution facilities); (ii) inadequate link between production and processing; (iii) seasonality of operations and low capacity utilisations; (iv) institutional gaps in supply chain, viz., dependence on APMC markets, etc.; (v) inadequate focus on quality and safety standards; and (vi) lack of product development and innovation (Government of India, 2018).
• Accordingly, the focus has been to smoothen the supply chain by creating infrastructure, promoting exports, improving quality standards, expanding supply of formal credit, particularly to small and medium enterprises, and broadening skilled labour pool in the economy.

Way Forward:

• Food processing revolution was now overdue for several decades. “In the 21st century, in a time of increasing agricultural production, India needs a post-harvest food processing revolution, with a focus on value addition.
• It would have been good for the country had this been done two to three decades back,”. In order to ensure that such a revolution takes place speedily, apart from the participation of farmers, public private partnerships were also needed.
• It was critical that storage facilities and processing units were available near the fields. Seaweed, beeswax, millets, coarse cereals and organic vegetables were the other sectors with significant potential.

Conclusion:

• Though India is a major producer and exporter of agricultural produce at raw material stage, only less than 10 per cent of them are processed and traded.
• One major reason for this is the large consumer base domestically and having preference for fresh produce over processed food. Slow pace of urbanisation and low labour force participation of women have resulted in the preference for fresh foods at the All-India level.
• India has the potential to emerge as a major exporter of processed food by adhering to the quality standards. The Government initiatives for strengthening quality standards can provide impetus to the sector
• An analysis of corporate data showed that profitability of food processing firms has been either higher or comparable with the levels of other firms.
• However, the value-added component in food processing firms was found to be lower than other firms operating in the industrial sector.
• The econometric analysis on credit reveals the importance of credit for growth in this sector. Relative to the share of the food processing sector in industrial GVA, sectoral credit data suggest adequate availability of credit for the sector.
• With the bourgeoning urban and young population, demand for processed food items is set to increase in the coming years. The food processing industry in India needs to gear up to meet the demand by investing in necessary infrastructure.
• The industry requires a steady flow of raw materials from the producers/farmers meeting specific quality standards and at stable prices.
• Farmer producer organisations, by bringing together small farmers and agricultural entrepreneurs, can enhance the opportunity to build more stable supply chain.
• Besides ensuring steady flow of income to the farmers, greater linkages with industry could also reduce wastages, particularly in perishables.

Source: The Hindu