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Food Processing in India

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Food Processing refers to various techniques and operations by which raw foodstuffs are transformed into food that are suitable for consumption, cooking, or storage. It consists of processes like the basic preparation of foods, the alteration of a food product into another form (as in making preserves from fruit), and preservation and packaging techniques. (The official definition may be seen in page 2 of [1] Data Bank on Economiic Parameters off the Food Processiing Sector.)

Processing of food has lot of advantages over raw food like longer shelf life, increased availability to farm produce and improved availability of the product throughout the year.

On one hand, India food processing sector has strong base because of the abundant production of raw food articles, aromatic and medicinal plants. On the other hand the level of food processing is not up to the mark as lot of wastage in post production handling and management take place.

This can be seen both when compared with the total potential of the sector and also vis-a-vis other developed countries [1]

The food sector engages maximum population and contributes significant portion of national income and consumer expenditure. Also, the demand for ready to eat food products by working and middle class in India is increasing and catering the same can help improve the lot of farmers in India and help Indian agriculture realise the desired growth rate of 4%. Hence, even as foreign fast food majors like McDonald's, Domino's and KFC are widening their network in the country, it's a matter of time that Indian food industry makes its presence felt globally. The next Indian food revolution will be about health, convenience and customisation.

In order to realise this, food processing in Indian economic context is considered as a sunrise industry. It serves as a crucial link between Agriculture and Industry. Hence, the growth of this sector helps in the growth of agriculture sector through backward linkages and also to the industry sector of which it is itself an important constituent and therefore to the overall GDP growth.

The average rate of growth of food processing sector during the first four years of the 10th Plan Period was @13.25 per cent at the current prices and @6.75 per cent at 1999-2000 prices. India’s food processing sector was growing at about 6% four years ago and is now expanding at nearly 15% annually, according to the Ministry of Food Processing Industries.

However, India’s share in export of processed food in global trade is only 1.5 %; whereas the size of the global processed-food market is estimated at Rs. 190 trillion and nearly 80 per cent of agricultural products in the developed countries get processed and packaged.

Structure of Food Processing Industry in India:-The food processing sector contributes 14% of manufacturing GDP with a share of ₹ 2, 80,000 crores. Of this, the unorganized sector contributes more than 70% of the production in terms of volume and 50% in terms of value [2]

Opportunities for the sector: Immense opportunities are because of both demand and supply side factors.

Demand side factors lead to increased willingness of the consumer to spend on the processed food articles thus increasing the demand for the same in the market like large disposable income, increased urbanisation, changing age profile with large share of young population having ability to spend and changing lifestyle, food habits, needs for convenience and health consciousness among the consumers.

Supply side factors affect the amount of availability of processed food in the market and thereby impacting the supply of the same like abundant production, ongoing retail revolution, varied cuisine that India offers with its rich cultural background, pool of manpower that can prove huge asset for the sector after provision of proper skills, scientific talent and testing and certification labs in place with emphasis on following International norms like codex.

Constraints faced by the sector:-Despite the opportunities, the food processing sector in India is still in nascent stage due to some constraints like production and procurement of quality raw materials for processing, lack of farmer processors linkages both backward and forward, appropriate infrastructure for instance warehouses, cold chain, grading centres and marketing channels, inadequate quality control, inefficient supply chain, high inventory carrying cost, high taxation, high packaging cost, high cost of finance, fragmented capacity, problems of wastage, lower capacity utilisation, poor economies of scale etc.

The Policy Action of the Government of India:-Indian government notified an integrated food law on 24th August 2006 i.e. Food Safety and Standards Act providing single window to food processing sector.

The Ministry of Food Processing Industries was set up in July, 1988 to give an impetus to development of food processing sector in India. The Ministry has taken Policy Initiatives for development of the food processing industry [3]

In order to make this sector vibrant, coordinated action both on the part of government at various levels and the industry is required. Public investment in providing critical infrastructure storage, integrated cold-chain infrastructure (with only 5,386 stand-alone cold storages which together have a capacity of 23.6mt) and processing infrastructure must step up.

Industry at the same time should come up with new processing technologies, new products, innovative packing, such that nutritional value, natural flavour, aroma of the raw food is retained along with the need for convenience, attractiveness and choice of the end user can be met through processed product. R&D through PPP could be explored. The awareness and education of the consumer with regards to the qualities of the processed food stuffs becomes equally important .Also, linkages between industry and the farmers should be developed and for this contract farming and other such arrangements can be made that could ensure the quality of farm produce. On farm processing and value addition should be encouraged.


References

  1. http://mofpi.nic.in/images/ar10-11.pdf
  2. http://mofpi.nic.in/ContentPage.aspx?CategoryId=122 ; http://mofpi.nic.in/images/ar10-11.pdf
  3. http://india.gov.in/sectors/commerce/food_processing.php
  4. Annual Report of Ministry of Food Processing Industries, 2010-2011
  5. “The Food Industry in India and Its Logic”, Rahul Goswami, EPW October 9,2010
  6. Report of working group on food processing sector, MOFPI (2006)


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