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Food Processing Industry in North India
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Tuesday, 18 August, 2015, 08 : 00 AM [IST]
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Vaibhav Verma and Manish Malhotra
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fiogf49gjkf0d India ranks second only to China in the world in terms of food production and fifth in areas of output, consumption, export and predicted growth.
It explains why the country’s food processing industry is one of the major industries. According to an estimate of the Confederation of Indian Industry (CII), the sector may generate employment of nine million people-days and may attract US$33 billion investment in the next 10 years.
Food processing includes the processing of fruits and vegetables, dairy, meat and poultry, food grains, fisheries and consumer foods (beverages, packaged food and water).
The sector is fragmented into unorganised, which includes innumerable flour mills, rice mills, pulse mills, hullers, oil-seed mills, traditional food units, bakeries, processing units of spices, fruits and vegetables; and the relatively smaller organised sector of flour mills and processing units of fruits and vegetables, fish, meat, poultry and dairy. The on-going transformation and industrial scenario offers opportunities for the growth and investment of the organised players.
The food processing industry has grown substantially in the last few decades. The increase in the incomes of the working class has led to rise in the disposable income to be spent on processed foods. The increase in the number of working women who get less time to do kitchen chores also is another factor for increased preference for processed foods. The change in the food habits of the working class which prefers readily available convenient foods is another factor. India is one of the top producers of fruits and vegetables and other food stuff. Hence availability of raw material makes it conducive for the growth of this sector.
There are more than 30 companies listed in BSE/NSE in this sector. However, the major players are Dabur India, Gits, Godrej Industries, Haldiram’s, MTR Foods, Parle Agro, HUL, Britannia Industries, ITC, Nestle, PepsiCo and Cadbury India. There is still a lot of scope for products related to meat, poultry, fisheries, milk products, beverages, grain processing and so on.
Food processing activities can be broadly classified into two categories:
Commodity-based: This includes primary processing of commodities like wheat, rice, sugar, and spices. Value-added: This includes secondary and tertiary processing such as that which is done for bakery items, milk products, honey, ready-to-eat/ready-to-cook and so on.
Commodity-based processing currently makes up nearly 66 per cent of the processed food market. Value-added processing, although currently low, is experiencing faster growth, at a CAGR of 10 per cent. The high growth sectors are dairy, health foods, RTE, organic foods, fruit juices and convenience foods, among others.
Key Issues and Challenges
The potential of Indian agriculture and food processing industry for growth cannot be disputed. However, certain challenges need to be tackled in order to unleash this potential; these include:
Decreasing Landholdings: The continued decline in the average size of land holdings has put Indian agriculture under immense duress. India’s 140 million hectare-wide farmlands are now worked upon by 14 crore farmers, up from seven crore farmers 40 years ago. The costs associated with necessary inputs and bank loans have also shot up in this period, making it difficult to sustain livelihoods purely through agriculture.
Poor Market Linkages: A fragmented supply chain, along with inadequate forward integration, has resulted in suboptimal quality, lower prices, and high wastage of produce at the farm level. For smaller and distant farmers, it is still a stiff challenge to directly access markets and get the desired price for their produce.
Inadequate Farm and Marketing Infrastructure: The lack of adequate storage and market infrastructure like weighing, auction platform, and packaging has added to the complexity of the problems facing Indian agriculture.
Lack of Processing-worthy Produce: Indian agriculture is still dominated by the practice of production-driven market supply instead of market-driven production, which leads to an inconsistency in the quality of produce and the supply thereof. Thus, there is a severe need to focus on processing-worthy varieties of produce and ensure a year-round supply of the same.
Processing Equipment and Latest Technology: The quest is on to discover newer methods, technology, and machinery for the food processing industry, with least impact on sensory qualities - colour, texture and so on. Therefore, technological progress is necessary for the growth of the food processing sector. The development and diffusion of quality-enhancing and yield-increasing technologies remains a key challenge.
There is huge potential for growth in various sectors of the food processing sector in the North Indian states (Punjab, Haryana, Uttar Pradesh, Uttarakhand, Himachal Pradesh, and Jammu and Kashmir). These include dairy, fruit and vegetables, meat and poultry, consumer foods and the ready-to-eat segment.
Punjab
The food processing sector is the focus area of investment in Punjab. The state government operates an agricultural mega project policy to facilitate investment in the food and agro processing sector. In line with the thinking of the Government of India, the state government has formed a separate department of food processing industries to look after the schemes of National Mission on Food Processing, launched by the ministry of food processing industries (MoFPI), Government of India for the 12th Five Year Plan.
Haryana
As per Government of Haryana’s Vision Document for the Food Processing Industry, 2013, the state’s food processing industry at present is highly fragmented comprising of a few large-scale international players and a multitude of small-scale players and cottage industries. At present, an estimated 2,248 companies are registered as food processing units which are engaged in processing of food grains and fruits and vegetables. The processing of food grains and oil mills which includes millings of various cereals like rice and wheat, mustard and rapeseed, contribute 75 per cent of the total processing industry in terms of the number of units.
In Uttar Pradesh, the Agri-Export Zones have been identified for following crops/regions:
?Potatoes: Agra, Hathras, Farrukhabad, Kannoj, Meerut, Aligarh and Bagpat
?Mangoes & Vegetables: Lucknow, Unnao, Hardoi, Sitapur, Barabanki, Saharanpur, Muzzafarnagar, Bijnaur, Meerut, Bagpat and Bulandshahar
?Basmati Rice: Bareilly, Shahajahanpur, Pilibhit, Rampur, Badaun, Bijnor, Moradabad, J B Phulenagar, Saharanpur, Muzaffarnagar, Meerut, Bulandshahar, Ghaziabad.
Himachal Pradesh
Agri-Export Zones: These have been planned by state government mainly for apples in Kinnaur, Shimla, Sirmor, Kulu, Mandi and Chamba.
?Mega Food Parks (under Mega Food Parks Scheme): MoFPI has awarded in-principle approval to Poliyan Mega Food Park Pvt. Ltd. (project SPV) for setting up a mega food park project in Tehsil Haroli District, Una.
?Cold Chain Projects being implemented under MoFPI Assistance: Under the Scheme for Cold Chain, Value Addition and Preservation Infrastructure, MoFPI has approved 10 cold chain projects which are in different stages of implementation and three additional projects have been given a provisional approval.
Uttarakhand
?A Mega Food Park (Patanjali food & Herbal park Ltd.) has been set up at Haridwar under Mega Food Parks Scheme of Ministry of Food Processing Industries (MoFPI). Another Mega Food Park project has been granted In-principle approval by MoFPI in Udham Singh Nagar district.
?Leading players in food processing industry like Nestle, Britannia, Dabur and ITC have set up their processing facilities in the state with cumulative investments of over Rs 2,500 million. In addition, there are a number of small- and medium-sized food processing units in the state.
J&K’s Food Processing Industry
?Food Processing Units: As per the data with MoFPI, there are about 136 registered processing units in Jammu and Kashmir under food processing industry. The key sub-sectors in the state include grain-based processing industries (including namkeen, snacks etc.), fruit-based processing, floriculture related activities, spice processing, candy/pickles and other horticulture-based industries.
?Agri-Export Zones: APEDA has identified Kashmir as Agri-Export Zone for apple. Ten districts of state have been declared as Agri Expo Zone of Walnut.
?Agro Food Parks: Two food parks have been established at Khunmooh (District Srinagar) and Doabegah (District Sopore) with the assistance of MoFPI.
The opportunities for value-addition in poultry products, soya-based products and in spices were also highlighted at the seminar. Speakers said since the consciousness for health had led to a heavy demand for healthy food, the agro-processing industry could make good profit by producing quality and healthy products.
Food processing industry is of enormous significance for India's development because of the vital linkages and synergies that it promotes between the two pillars of our economy, industry and agriculture. Fast growth in the food processing sector and progressive improvement in the value addition chain are also of great importance for achieving favourable terms of trade for Indian agriculture both in the domestic and international markets. Even more important is the crucial contribution that an efficient food processing industry could make in the nation's food security. The simple fact that the post-harvest losses are about 25 to 30 per cent in our country should serve as an eye-opener for all of us. Even marginal reductions in these losses are bound to give us great relief on the food security front as well as improve the income levels of the farmers.
(The authors are asst professors at Banarsidas Chandiwala Institute of Hotel Management & Catering Technology)
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