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National Mission on Food Processing at various stages in different states
Wednesday, 23 January, 2013, 08 : 00 AM [IST]
Abhitash Singh & Akshay Kalbag, Mumbai
The food processing industry in India currently stands at $135 billion, and it is projected that it will grow at a compounded annual growth rate (CAGR) of 10 per cent to reach $200 billion by 2015. During the Twelfth Five Year Plan, which commenced last year (and ends in 2017), the ministry of food processing industries (MoFPI), Government of India, launched the National Mission on Food Processing (NMFP), driven by the tremendous growth.

The mission has four objectives – (i) technology upgrade / establishment / modernisation of food processing industries; (ii) cold chain, value addition and preservation infrastructure for non-horticultural produce; (iii) human resource development; and (iv) schemes for promotional activities.

Several states of the country, including Bihar, Punjab, Haryana and Maharashtra (and Karnataka's Dakshina Kannada district), are already at different stages of implementing the mission.

Bihar is the only state to have a vision and schemes in place for the food processing sector. One of these is MoFPI's food park scheme. The Government of Bihar has approved 123 food processing projects so far. These encompass a number of segments, of which the two most prominent are (i) the scheme for the integrated development of the food processing sector, and (ii) the food park scheme.

Scheme for integrated development
Under its scheme for the integrated development of the food processing sector, the government of the eastern state has proposed to provide a grant-in-aid of up to 40 per cent of the project cost, subject to a maximum of Rs 10 crore, in case of common cluster infrastructure, and a grant-in-aid of up to 35 per cent of the project cost, subject to a maximum of Rs 5 crore, in case of individual investors.

Food park scheme
The Government of Bihar also launched a scheme for food parks. Under this scheme, the government proposed to set up two food parks for fruit and vegetable clusters in the state. One of the two clusters would be located in the Muzaffarpur-Vaishali region, which has the Champaran food park, and the location for the other is the Bhagalpur-Katihar region, which has the Bhagalpur food park.

For the food parks, the state government provided assistance to set up a Special Purpose Vehicle (SPV), registered as a corporate body. It would be based on the public-private partnership (PPP) model, wherein private entrepreneurs would hold 51 per cent equity while the rest would be from state government agencies, banks, financial institutions, etc. The government would provide a grant of 20 per cent of the project cost, subject to maximum of Rs 15 crore.

Vision 2022
According to the Bihar government's Vision 2022, units for the processing of paddy, maize, fruit and vegetables, wheat and sugarcane are expected to come up.   

According to data for 2011, Bihar produced 70 lakh metric tonnes of paddy, and it is estimated that by 2020, the state will be producing 126 lakh metric tonnes (as per an Agri Road Map estimate). There is a very huge demand for edible oil in the state, but at present the state has to rely on imports.

To meet the huge demand for rice bran oil and power, the Government of Bihar has a vision of creating production of 225 MW power through paddy husk-based fuel and also to become a self- sufficient state in production of edible oil (rice bran oil), creation of 125 lakh ton / annum of paddy milling capacity.

The state currently produces 19 lakh metric tonne of maize. By 2020, it is estimated that the state will produce 90 lakh metric tonne. In the international market, there is already an increasing demand for corn oil and starch.

With the huge availability of unused maize in Bihar, the state government can create 25 corn processing units of 200 thermal design power (TDP) each for products including starch, poultry / cattle / animal feed and snacks, six corn oil units having a processing capacity of 200 TDP and warehouses having a storage capacity of 20 lakh tonne of maize.

Fruit and vegetables
Bihar now produces 38 lakh metric tonne of fruit and 136 lakh metric tonne of vegetables. By 2020, the state's target is to produce 80 lakh metric tonne of fruit and 226 lakh metric tonne of vegetables. Out of the total vegetable production, 60 per cent consists of potatoes. In modern cold storage units, about 10 per cent of the fruit and other perishable items are stored alongside potatoes.

The best way to safeguard the interests of the farmers is by reducing the wastage from 30 per cent to less than five per cent and increasing infrastructure. The state government has an ambitious plan to increase the processing to 30 per cent of the total production, reduce the wastage to less than five per cent, create more than two rural agri-business centres (RABCs) in each block and three mega food parks for fruit and vegetables.

At present, Bihar produces 49 lakh metric tonne of wheat. By 2020, the state aims to produce 74 lakh metric tonne. About 40 per cent of the total wheat is sold to other states for the manufacture of biscuits, bakery items, vermicelli and other flour items.

To create more job opportunities in Bihar, the state government has planned to set up modern biscuit and bakery factories with an annual production capacity of 10 lakh metric tonne and 50 modern flour mills for the production of suji, atta and maida, each of which will have a capacity of 300 and 500 TPD (so that the state will be self-sufficient in the supply of fortified atta to the local populace).

The state currently produces 125 lakh metric tonne of sugarcane. By 2020, it is expected that the state will produce 250 lakh metric tonne. To make the sugar mills more viable, it should generate its bagasse-based power plant. To make this happen, the state government's vision for the sugarcane sector is to make 28 sugar mills functional and increase sugar recovery to more than 13 per cent.

Impact of the vision 2022
By 2022, the Government of Bihar will have a plan outlay of Rs 1,448 crore for the food processing sector. This will bring in a total investment of Rs 7,241 crore, which in turn will create 12 lakh more jobs. In the next 10 years, the food processing sector will increase the processing of raw materials by more than 30 per cent and reducing the wastage to less than five per cent, as a result of which farmers' income levels will increase by 25 per cent.

Food processing is a focus area of investment in Punjab. For the development of this sector, the state government granted exemptions on a number of things, including stamp duty on the purchase of land. It has put in place an agricultural mega project policy to facilitate investment in the food and agro processing sector.

Under this agricultural mega project policy, project proposals envisaging fixed capital investment of Rs 25 crore or above are covered. Such proposals are offered a number of fiscal and facilitation concessions such as exemption from stamp duty on the purchase of land for the designated purpose, five per cent exemption on electricity duty for five years, 50 per cent exemption from mandi fees on the purchase of non-Food Corporation of India (FCI)-grade paddy for processing in the unit for 10 years subject to maximum of 50 per cent of fixed capital investment, 100 per cent exemption from mandi fees on the purchase of fruit and vegetables for processing in the plant for 10 years and so on.

Under the scheme, out of the 63 projects approved by the government, 57 projects with investment of Rs 6,776 crore are under various stages of implementation or completion. Punjab Agro Industries Corporation Ltd (PAIC) acts as a nodal agency to receive proposals and presenting them to the government for its consideration. The state government also formulated the Agro Industrial Policy, 2009, to boost investment in this sector. Projects that have fixed capital investment of less than Rs 25 crore are covered under this policy.

PAIC has also been given the mandate to promote food and agro processing industries in financial collaboration with private investors. PAIC contributes between 11 and 26 per cent in the equity capital of such projects. In order to encourage small and medium farmers and entrepreneurs to set up their processing units, PAIC has proposed to set up a food processing development centre in Punjab for the standardisation of food processing technologies based on the locally-grown crops.

Based on the Twelfth Five-year Plan made by the ministry of food processing industries (MoFPI), the government of Punjab has formed a separate department of food processing industries to look after the schemes of the NMFP.

The food processing division of the Haryana government's department of industries and commerce is currently inviting applications to seek a grant under the NMFP for the state for the year 2012-2013. The application form is available on the website of the MoFPI, and the deadline for receiving the same is January 30, 2013.

According to T L Satya Prakash, mission director, food processing industries, and director of industries and commerce, Haryana, “There are two main components of the scheme – (a) technology ugradation / establishment / modernisation / expansion of food processing industries, and (b) cold chain, value addition and preservation infrastructure for non-horticultural produce.” This was corroborated by R C Dhara, additional director, food processing industries.  

The Maharashtra government recently decided to implement the NMFP, and made a provision of Rs 5.5 crore for the same. The Centre would be providing Rs 16.5 crore. The State Cabinet not only gave the mission, a centrally-sponsored programme, its nod, but also appointed the Maharashtra Agro Industries Development Corporation as the nodal body to implement it.

Maharashtra's chief secretary is in charge of overseeing the implementation of the programme, which is expected to provide assistance to small self-help groups involved in food processing. It will raise food safety and hygiene standards to globally-accepted norms and enhance the standard of Maharashtra's small food processing units, and provide micro-credit, facilitate the transfer of technology and help the units build capacity.

The programme will undertake the ‘upgradation’ of skills by imparting training at institutions, so that people will have sustainable employment opportunities. It also aims to reduce the gap in requirement and the availability of skilled manpower in the food processing sector. It would cover fruit and vegetables, milk products, meat, poultry, fishery, oilseeds products, rice milling, pulse processing, food flavours and colours, oleoresins (plant extracts) and spices.  

Dakshina Kannada
The Dakshina Kannada District Food Processing Mission – under the Centre's National Mission for Food Processing – came into force recently. An interesting point to be noted is that the mission will offer a grant of up to Rs 75 lakh to colleges to offer certificate, diploma, degree or post-graduate courses in food processing and set up food processing units on a pilot basis. To avail the grant, an institution will have to submit a project proposal to the district mission.

According to the deputy director of the department of horticulture, Dakshina Kannada (who is also the member-secretary of the district mission), “The district mission is a body which comprises 11 members. It came into being recently. The deputy commissioner of the district has been appointed as its head. The National Mission on Food Processing came into force under the Twelfth Five-Year Plan.”

He added, “Colleges and universities use the amount to purchase books and e-journals, set up laboratories and purchase equipment for the same. The project proposal should be an all-encompassing one. Rs 75 lakh is the ceiling; the government would provide about 10-20 per cent of the project cost to the institutions only after the government gives its nod. It would be a one-time grant.”

“An autonomous college in Mangalore (the district headquarters) had submitted a proposal seeking a grant to offer a post-graduate programme in food processing,” the member-secretary of the district mission said, adding, “The mission will offer entrepreneurs a financial grant to set up new food processing units or upgrade the technology of their existing ones. The assistance would be 25 per cent of the project cost, with a maximum ceiling of Rs 50 lakh.”

“It offered half the project cost – with a maximum ceiling of Rs 10 crore – as assistance to set up cold storage units, value addition units and to purchase refrigerated vans which support supply chain development. Non-governmental organisations (NGOs) and other identified institutes / bodies which promoted food processing activities through seminars, workshops, training programmes, exhibitions and tours could avail assistance ranging between Rs 1 lakh and Rs 3 lakh,” he added.

He said there would be a year-long follow-up of the beneficiary bodies' activities. For example, if an institute trained 20 candidates in food processing, the activities of those that had forayed into food processing would be monitored for a year. “Besides horticulture produce, the food processing activities would apply to fish, meat and dairy. As the financial year 2012-13 ends in March, the mission will focus on promotional activities in the district in the next three months,” he said.
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