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Food grains - import-export and processing in India
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Wednesday, 01 August, 2018, 08 : 00 AM [IST]
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Rupa Das
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Nearly everything in India is flourishing, from its economy and middle class to its increasingly young population and growing demand for consumer-oriented agricultural products. In order to feed its richer, younger and more urban population, India’s annual agricultural imports continue to rise and are expected to continue to grow in the future. Since 2010, India’s annual agricultural imports increased more than 60 per cent, from $14.1 billion to $22.8 billion in 2015. Imports of bulk and intermediate goods, like pulses and edible oils, more than quadrupled over the past 10 years. In addition, India’s imports of consumer-oriented agricultural products, the fastest-growing import category in recent years, doubled since 2010, as India’s consumers increasingly demand high-value foods.
Consumer products
According to the most recent International Grains Council (IGC) figures, India’s total grains production in 2016-17 was 136.2 million tonne, up from 124.6 million the year before. Agriculture and food sectors form an important part of the consumer products industry.
India is the world's second-largest producer of rice, wheat and other cereals. The huge demand for cereals in the global market is creating an excellent environment for the export of Indian cereal products.
The important cereals are wheat, paddy, sorghum, millet (bajra), barley and maize. According to the final estimate for the year 2015-16 by Union ministry of agriculture, the production of major cereals like rice, maize and bajra stood at 104.41 million tonne, 22.57 million tonne and 8.07 million tonne respectively.
In spite of being an agrarian economy and the largest producer of rice, dairy and cotton, India is still the biggest importer of food grains. Currently, India’s imports consist primarily of staple foods that are under-supplied by domestic production, such as pulses and vegetable oils. Limited product groups (palm oil, pulses, soybean oil, other vegetable oils and tree nuts) make up 72 per cent of India’s total agricultural imports by value as per reports from Global Trade Alerts.
If we analyse, there are several factors responsible for this: While this sector presents immense opportunities for investments, it also faces many challenges as below:
Dependence on rainfall - India’s agricultural production is mostly dependent on Indian monsoons. If poor rainfall occurs, crops get damaged. And if excess rainfall occurs in the form of floods, crops get damaged. So, in both cases, it leads to poor supply and great demand of grains.
Absence of a seamless supply chain - There is a rising need for a seamless supply chain to curb wastage & improve losses to farmers. It will also help in reducing inflation.
Nascent food processing sector - Presently only 10% of India's total perishable food produce undergoes processing. In the absence of modern harvesting technologies, post-harvest and cold chain infrastructure, the sector experiences high proportion of wastage.
Minimum Support Price for producers - There is a dire need for agro-producers to get Minimum Support Price (MSP) from the government, as it is forcing farmers to look for other lucrative sources of earning.
Outdated technology and lack of awareness about new developments - It is critical to increase productivity by moving away from traditional farming methods by adopting widespread use of agricultural machinery & advanced powered equipment and implements for growth in this sector.
The Indian food processing industry holds tremendous potential to grow, considering the still nascent levels of processing at present. Though India’s agricultural production base is reasonably strong, wastage of agricultural produce is sizeable. Processing of fruits and vegetables, milk, meat and poultry is low, in comparison, to the other developing countries.
India, with an arable land of 184 mn hectare, is the highest producer of milk in the world at 90 mn tonne p.a., second-largest producer of fruits & vegetables (150 mn tonne), third-largest producer of food grains and fish and has the largest livestock population. Considering the wide-ranging and large raw material base that the country offers, along with a consumer base of over one billion people, the industry holds tremendous opportunities for large investments.
"There is a huge scope for large investments in food processing technologies, skill development and equipment as total food production in India is estimated to double in next 10 years," said the joint study by Indian industry body Assocham and Chicago-based professional services firm Grant Thornton. The country's food and retail market is expected to touch US$482 billion by 2020, up from US$258 billion in 2015, with recent reforms making the sector more competitive and market-oriented, it said.
This sector is among the few that serve as a vital link between the agriculture and industrial segments of the economy. Strengthening this link is of critical importance to improve the value of agricultural produce; ensure remunerative prices to farmers and at the same time create favourable demand for Indian agricultural products in the world market. Mentioned below are key focus areas for the food processing sector:
Focus Areas
Development of food parks - The summit will focus on fully integrated food parks, which the Government of India is promoting to attract major investments in the food processing sector.
FDI in food products multi-brand retail - There will be focus on the FDI policy of the government, its positive impacts, and opening of doors for foreign companies to come and set up businesses in India.
Leveraging public-private partnership - There is a need to see how government and private sectors can come together for the greater benefit of the food processing sector, wherein government can play a role of a facilitator.
Promotion of organised supply chain - Supply chain infrastructure is vital for the success of the food processing sector, and brainstorming on the anomalies, will help improve upon the existing set up.
Skill development programmes - No sector can rise without skilled manpower, as they are the real engines required at every stage from farm to fork. To be a success story, making of competent manpower needs focussed discussion.
Increase awareness of quality and safety - Quality standards followed world over, need to be followed, so that India can become quality-conscious producer and exporter.
Latest innovations - All the latest innovations happening in food processing sector will be focussed, so that the industry can bring in latest technologies and processes to cater to their clients.
Input subsidies and minimum price supports for producers - These are key domestic policy tools to support agriculture and encourage domestic production for food self-sufficiency.
Given the scenario, the Government of India has been giving a push to creation of enabling infrastructure for food processing. Government of India has approved setting up of 42 MFPs in the country, out of which MoFPI has sanctioned 41. Of the 41 MFPs, nine have already commenced operations. The parks have more than 1,200 developed plots (of approximately 1 acre each) with basic infrastructure enabled, that entrepreneurs can lease for the setting up of food processing and ancillary units.
Scheme of Cold Chain, Value Addition and Preservation Infrastructure - The ministry of food processing industries (MoFPI) has approved a total of 228 cold chain projects under this scheme, of which 109 have been completed and are operational. The objective of the scheme is to provide integrated cold chain and preservation infrastructure facilities, without any break, from the farm gate to the consumer.
Exports
n India is not only one of the key producers but also a major exporter of cereals globally. India's export of cereals stood at US$6,074 mn MT during the year 2016-17
n Rice (including Basmati and Non-Basmati) occupy the major share in India's total cereals export with 93.60% share
n Other cereals including wheat represent only 6% share in total cereals exported from India
n The huge demand for cereals in the global market is creating an excellent environment for the export of Indian cereal products
n The key importers of India's Basmati rice include Saudi Arabia, Iran, the UAE, Iraq, Kuwait and USA
Opportunities
n Processing of cereals to high value products like snacks, ready-to-cook/ ready-to- eat products, bakery products
n Share of healthy variants of cereals-based products such as multigrain flour, brown bread, brown rice, multigrain bread, whole wheat bread are witnessing significant growth.
n Super cereals or millets are witnessing a huge demand domestically and in global markets due to the health benefits that they offer
n Opportunity for millet-based value-added
products
To sum it up, Indian food processing sector is poised for growth & efforts are in full swing in order to make India - The Food Bowl of The World and push forward “Make in India” initiative. At the same time, government needs to make radical policies and implement to improvise the agriculture sector in India.
(The author is a food & beverage marketing & strategic communication expert. She is a director at One Media Group and can be contacted at rupa.omg@gmail.com)
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