FOOD PROCESSING

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:

• Rising Population and Income: India is expected to have 1.5 Billion population by 2030. This is a large contributing factor to the demand for processed foods

• Changing Lifestyles and Consumer Preferences: Urbanization, modern lifestyles and changing dietary pattern are influencing the demand for ready-to-eat meals, snacks & processed food products.
• Example: Maggie, Readymade Soup.

2. Initiatives and policies by Government of India:

• "Make in India" Initiative: The Make in India campaign strives to boost manufacturing and draw foreign investment into the food processing sector through incentives as well infrastructure development.
  
  
• Food Processing Policy, 2019: From this policy aims to overhaul food processing industry by promoting investment and technology up-gradation with the development of infrastructure.
• Example: "Government's emphasis on developing the cold chain infrastructure under 'Make in India' has helped improve storage & distribution of perishable food products, leading to lesser losses and promoting exports."
  
  

3. Technological Advancements:

• Automation and Robotics: Automation and robotics are being increasingly used in food processing plants to increase productivity, lower labor costs as well as produce better quality products.
  
  
• E-commerce and Online Retail: The rapid expansion of e-commerce platforms has provided food processing companies with an opportunity to target direct-to-consumer sales, thereby expanding market outreach. Ex- Reliance JIO mart.
  
  

4.Focus on Value Addition and Diversification:

• Beyond Raw Commodities: There's a growing emphasis on processing raw agricultural products into higher-value products, like ready-to-eat meals, processed fruits and vegetables, and value-added ingredients.
  
  
• Specialty Foods and Organic Products: The demand for organic, healthy, and specialty food products is increasing, creating new opportunities for niche markets.
• Example: India is seeing a surge in demand for organic spices, packaged fruit juices, and ready-to-eat meals catering to health-conscious consumers, driving growth in value-added food processing.
  
  

5. Growing Export Potential:

• Global Demand for Indian Food: There is a rising global demand for Indian food products, especially spices, tea, rice, and processed foods.
  
  
• Free Trade Agreements: India's free trade agreements with various countries are creating favorable trade conditions for food exports.
• Example: India's growing exports of basmati rice, spices, and processed fruits and vegetables reflect the growing global demand for Indian agricultural products.

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:

• Rreduction in post-harvest losses: Post-Harvest loss is paramount for India having below par storage, transportation and processing facilities.
  
  
• Value Addition: Value addition by converting the raw agricultural products into higher-value products (like ready-to-eat meals, packaged foods and processed ingredients) increases farmers income while creating new markets for their produce.
• Example: Establishment of fruit processing units in mango-producing regions of India reduced post-harvest losses for mangoes, raised farmer income and created new markets for products like pulp/juice/pickle from the same.
  
  
  

2. Balanced food security and Preventing Food wastages:

• Food Accessibility: Processing food items, for example packaged pulses & grains and canned vegetables provide essential commodities in the lean season thus ensuring year-round access to these basic necessities -and hence contribute to Food Security.
  
  
• Minimize Food Waste: Efficient processing and packaging techniques lead to less food waste, which is a huge problem in India leading to better resource utilization as well as reduced hunger.
• Example: The development of the processed milk industry in India has ensured a consistent supply of milk products throughout the year, reducing dependence on seasonal availability and addressing issues of milk spoilage.

3.Generating Employment:

• Employment Generation: Food processing industry provides employment during the process of sourcing, packaging and distribution. This fuels rural development and economic growth.
  
  
• Skill Development: The entire industry not only helps in the development of skills such as food processing technology, quality control, packaging and logistics but gives around 40% employment to skilled workers.
  
  
• For Example: Growth in the packaged food industry has generated employment for skilled and unskilled labor ranging from food processing plants, packaging units, to distribution networks.
  
  
  

4. Making a Contribution to Economic Growth and Exports:

• Value-Added Products: Processing of raw agricultural products to value-added means enhances their export potential, which brings foreign exchange revenue in the country.
  
  
• Economic Multiplier Effect: Food processing industry has got a high `multiplier effect` as each unit of investment in food sector leads to enhancement and generation of five times more economic activities not just within this domian but also relate sectors like packaging,transportation, logistics etc.
  
  
  
• Example: India's growing exports of processed foods like basmati rice, spices, and frozen vegetables contribute significantly to the country's foreign exchange reserves and economic growth.
  
  
  

5. Facilitating Consumer Choice and Convenience:

• Product Variety: The food processing industry offers a wide variety of processed and packaged foods, providing consumers with greater choice and convenience in terms of taste, variety, and accessibility.
  
  
• Ready-to-Eat & Convenience Foods: Processed foods such as instant noodles, ready to eat meals and packaged snacks were more appealing in our fast pace life style offering convenient food options.
• Example: Urbanization and increased disposable incomes have resulted in rising consumer demand for ready-to-eat meals, packaged snacks/packaged cakes/cake mixes or instant noodles.
  
  
  

6. Advancing Innovation and Technology:

• Technological Advancements: The food processing industry is a leading source of technological advancement in packaging, process and quality control to increase efficiency and product standards.
  
  
• Research and Development: Innovations in food processing technologies, improved product safety research to develop new food products are critical investments of the company.
  
  
  

7. Resolving the Food Safety & Quality Issues:

• Food Safety Standards: The processed food is always prepared in the most high standard ways so that they are not harmful when consumed by customers, as we see many companies follow food safety practices, accordingly and avoid poisoning people consuming them.
  
  
• Quality Control System: The industry uses a quality control system right from sourcing raw materials to packing the product which ensures standards of products are met and consumers have their expectations fulfilled.
  
  
• Example: safety and hygiene of processed food products are guaranteed due to the implementation of HACCP (Hazard Analysis and Critical Control Points) protocol among other standardization measures for this sector, beefing up consumer confidence by few notches.
  
  

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.