FOOD PROCESSING
- Date: 23 August, 2024
FOOD PROCESSING AND MEGA FOOD PARKS
Food processing is the transformation of agricultural products into food, or of one form of food into other forms. The Food processing sector significantly contributes to India’s economy, accounting for 13% of exports and 6% of industrial investment
The Scheme of Mega Food Park aims at providing a mechanism to link agricultural production to the market by bringing together farmers, processors and retailers so as to ensure maximizing value addition, minimizing wastage, increasing farmers income and creating employment opportunities particularly in rural sector.
Key drivers for food processing industry in india:
1. Growing Domestic Demand:
2. Initiatives and policies by Government of India:
3. Technological Advancements:
4.Focus on Value Addition and Diversification:
5. Growing Export Potential:
The Relevance of Food Processing Industry in India:
Food processing industry is a major contributor to the economy of India, besides providing food security and social economic growth. It can be evaluated in various ways and some of the important aspects are referred to as its significance
1. Raise the Productivity and Income in Agriculture:
2. Balanced food security and Preventing Food wastages:
3.Generating Employment:
4. Making a Contribution to Economic Growth and Exports:
5. Facilitating Consumer Choice and Convenience:
6. Advancing Innovation and Technology:
7. Resolving the Food Safety & Quality Issues:
CHALLENGES:
Although the food processing industry in India being full of potential, there are various challenges which need to overcome for better growth and utilisation of benefit. Broadly they come in these categories:
1. Infrastructure Gaps:
Cold Chain Infrastructure: Cold chain infrastructure is inadequate; there are not enough refrigerated transport, storage facilities or processing units leading to major post-harvest losses especially in perishable products like fruits, vegetables and dairy.
Access to Electricity: Poor and inconsistent electricity supply, particularly in rural regions makes processing activities difficult while also adding on costs.
Poverty of infrastructure: Inadequate road and rail network especially in interior regions results in high transport costs as well as delays the transportation of processed items.
Example: Remote farmers may struggle to get perishables safely from storage units for processing due to poor condition of roads and lack of refrigerated trucks.
2. Financial Constraints:
Lack of Desired Access to Credit: Small and medium enterprises (SMEs) in the food processing industry usually face difficulties accessing credit lines by bank institutions with strict borrowing criteria.
High Interest Rates: Having lenders charging high interests to loans make it more expensive for a business.
Lack of Investment: The food processing sector is characterised by very little investment, both from the private as well as public stakeholders which prevents it not only to develop new technologies but also setting up processing units or developing supply chain.
Example: Small food processors get access to expensive informal financing options and lack financial liquidity, making them unable to invest in new equipment or scale.
3. Technological Gaps:
Limited Technology Adoption: The adoption of new-age technologies like automation, robotics & sophisticated processing is low increasing inefficiencies and production costs.
Lack of skilled Workforce: The industry lacks both in terms of availability and quality, trained manpower In food processing technology.quality control, packaging & logistics etc.
4. Market Access Barriers:
Competition from Imports: The food processing sector faces competition from processed foods that are imported, especially manned by developed countries with advanced technologies and economies of scale.
Non-Tariff Barriers: Importing countries often use non-tariff barriers like stringent sanitary and phytosanitary (SPS) regulations, technical standards & import restrictions etc. that block further expansion of our market access for Indian food products
Example: India is unable to export processed fruits and vegetables in certain markets due to tough phytosanitary regulations implemented by importing countries.
5. Information and Market Support :
Limited Market Intelligence: Food processors do not have any access to real-time information on the consumer market demand, food trends and import regulations making it hard for them to identify new markets.
Poor Export Promotion: Government efforts and intervention in the direction of boosting exports are not enough resulting to difficulty in reaching international market thereby highlighting need for simplification of various trade agreements
Example: Small-scale processors often lack the resources and knowledge to access international markets and comply with complex export regulations
6. Sustainability Concerns:
Environmental Impacts: The food processing industry can lead to some environmental problems such as air, land and water pollution the production of waste, deplete resources..
Example: The use of excessive packaging materials and inadequate waste management practices in the food processing industry contribute to environmental concerns.
7. Poor Coordination and Collaboration:
Unorganized Sector: The food processing sector in India is fragmented with a large number of small and medium enterprise
Lack of Collaboration: Limited collaboration between different stakeholders, including farmers, processors, retailers, and policymakers, hinders the development of a cohesive and efficient food processing ecosystem.
Example: Poor coordination between the farmers and processors can lead to bottlenecks in the supply chain conduit and making it difficult for processing plants (processors) to meet their needs.
GOVERNMENT INITIATIVES:
1) FDI POLICY:
100 % FDI permitted for food processing
100 % FDI under government approval route for trading, including the same through e-commerce, with respect to food products manufactured and/or produced in India
2) PRADHAN MANTRI KISAN SAMPADA YOJNA (PMKSY):
The initiative aims to create modern infrastructure for food processing and preservation, improve access to finance for food processing SMEs, and provide training and technical assistance to these enterprises.
The government has also set up a number of food parks and clusters, which provide a range of facilities and support services to food processing companies.
3) Scheme for Mega Food Parks:
The Mega Food Parks Scheme covering a minimum area of 50 acres, operates using a cluster-based approach, following a hub and spokes model that aims to establish a vital link between agricultural production and the market. By bringing together farmers, processors and retailers.
4) Scheme for creation of backward and forward linkages:
Provide effective and seamless backward and forward integration for processed food industry by plugging the gaps in supply chain.
5) PM Formalisation of Micro food processing Enterprises (PMFME) Scheme:
The scheme provides financial, technical and business support for setting up / upgradation of 2 lakh micro food processing enterprises in the country through credit linked subsidy during five years from 2020-21 to 2024-25 with an outlay of Rs. 10,000 cr.
6) The Scheme of Cold Chain, Value Addition, and Preservation Infrastructure:
It aims to establish a seamless and integrated cold chain system from the farm gate to the end consumer. This comprehensive infrastructure includes pre-cooling facilities at production sites, reefer vans, mobile cooling units, and value addition centers, ensuring the preservation.