RAU’S IAS ------------------------------- B K REDDY SIR

FOOD PROCESSING SECTOR

Food processing is a technique of manufacturing and preserving food
substances in an effective manner with a view to enhance their shelf
life; improve quality as well as make them functionally more useful.
Food processing sector is a sunrise sector in India. It provides many
positives prospects as well as face many challenges. Hereby discussing
the prospect of this sector in India, challenges faced and steps needed.
IMPORTANT DRIVERS
 India is the world’s second–largest producer of fruits and vegetables.
 India has second largest production of marine products, and meat and
poultry
 India is the single largest producer of milk in the world, with the
production estimated at 137.7 MT.
 India has the largest livestock population across the globe, which is
equal to 512 million, including 119 million milch (in-milk and dry)
animals, 135 million goats and 65 million sheep.
 The segment contributes about 25 per cent to the country’s farm
Gross Domestic Product (GDP).

PROSPECTS OF FOOD PROCESSING IN INDIA

 Strong demand growth
o Demand for processed food rising with growing disposable income,
urbanisation, young population and nuclear families
o Household consumption set to double by 2020
o Changing lifestyle and increasing expenditure on health and
nutritional foods
 Food processing hub
o India benefits from a large agriculture sector, abundant livestock,
and cost competitiveness
o Investment opportunities to arise in agriculture, food infrastructure,
and contract farming
o Diverse agro-climatic conditions encourage cultivation of different
crops
 Increasing investments
 o Investments, including FDI, would rise with strengthening demand
and supply fundamentals
o Launch of infrastructure development schemes to increase
investments in food processing infrastructure
 Policy support
o Sops to private sector participation; 100 per cent FDI under
automatic route.
o Promoting rationalization of tariff and duties relating to food
processing sector.
o Setting up of National Mission on Food Processing
CHALLENGES AND STEPS NEEDED
 Poor quality of produce- not of processing standard.
 Lack of Integrated domestic market'
 Lack of quality standards and poor focus on good manufacturing
practices
 Losses high among perishables such as fruits and vegetables
o Crop losses ranged between 7-16% among fruits and around 5%
among cereals in 2015.
o Perishables such as fruits and vegetables are more prone to losses
as compared to cereals. Such crop losses can occur during
operations such as harvesting, thrashing, grading, drying,
packaging, transportation, and storage depending upon the
commodity.
 Inadequate food processing infrastructure: forced to sell their produce
soon after harvest, irrespective of the prevailing market situations.
 Cold chain infrastructure needs to be coupled with logistical support
to facilitate smooth transfer of harvested value from farms to distant
locations.
 Transport Facilities: Committee on Doubling Farmers Income had
recommended that railways needs to upgrade its logistics to facilitate
the transport of fresh produce directly to export hubs. This includes
creation of adjoining facilities for loading and unloading, and
distribution to road transport.
MEGA FOOD PARKS
The Mega Food Parks scheme was launched in 2008. It seeks to
facilitate setting up of food processing units. As of March 2018, out of
the 42 projects approved, 10 were operational.
The Standing Committee on Agriculture noted certain reasons for delay
in implementation of projects under the scheme. These include: (i)
difficulty in getting loans from banks for the project, (ii) delay in
obtaining clearances from the state governments and agencies for
roads, power, and water at the project site, (iii) lack of special
incentives for setting up food processing units in Mega Food Parks, and
(iv) unwillingness of the co-promoters in contributing their share of
equity.
Further, the Standing Committee stated that as the scheme requires a
minimum area of 50 acres, it does not to promote smaller or individual
food processing and preservation units. It recommended that smaller
agro-processing clusters near production areas must be promoted.
The Committee on Doubling Farmers Income recommended
establishment of processing and value addition units at strategic
places. This includes rural or production areas for pulses, millets, fruits,
vegetables, dairy, fisheries, and poultry in public private-partnership
mode.
Role of E-commerce in improving supply chain management
E-commerce helps in:
1. Reducing the distribution and transactions costs.
2. Increasing the speed of product development.
3. Providing more information for buyers and sellers.
4. Increasing the options of customer and their access to suppliers.
5. Reducing the time intervals.
 Pradhan Mantri Kisan SAMPADA Yojana
Government of India (GOI) has approved a new Central Sector Scheme – Pradhan
Mantri Kisan SAMPADA Yojana (Scheme for Agro-Marine Processing and
Development of Agro-Processing Clusters) with an allocation of Rs. 6,000 crore
for the period 2016-20 coterminous with the 14th Finance Commission cycle.
The scheme will be implemented by Ministry of Food Processing Industries
(MoFPI). Pradhan Mantri Kisan SAMPADA Yojana:

PM Kisan SAMPADA Yojana is a comprehensive package which will result in

creation of modern infrastructure with efficient supply chain management from
farm gate to retail outlet. It will not only provide a big boost to the growth of food
processing sector in the country but also help in providing better returns to
farmers and is a big step towards doubling of farmers income, creating huge
employment opportunities especially in the rural areas, reducing wastage of
agricultural produce, increasing the processing level and enhancing the export of
the processed foods.

The following schemes will be implemented under PM Kisan SAMPADA

Yojana :

 Mega Food Parks

 Integrated Cold Chain and Value Addition Infrastructure
 Creation/ Expansion of Food Processing/ Preservation Capacities (Unit
Scheme)
 Infrastructure for Agro-processing Clusters
 Creation of Backward and Forward Linkages
 Food Safety and Quality Assurance Infrastructure
 Human Resources and Institutions

PM Kisan SAMPADA Yojana is expected to leverage investment of Rs. 31,400

crore for handling of 334 lakh MT agro-produce valued at Rs. 1,04,125 crore,
benefiting 20 lakh farmers and generating 5,30,500 direct/indirect employment
in the country by the year 2019-20.