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Industry identifies key areas driving growth of food processing sector
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Monday, 26 May, 2014, 08 : 00 AM [IST]
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Ashwani Maindola, New Delhi
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fiogf49gjkf0d Experts identified key areas for driving growth of the food processing sector during a conference on the future of the food processing industry, organised in New Delhi by the Confederation of Indian Industries (CII).
These included new foods, food service and retail opportunities. An addition to the list was the target of enhancing value addition from the current level of ten per cent to 20 per cent, as proposed by the the Ministry of Food Processing Industries (MoFPI) in its vision document.
The sector also marked supply chain, infrastructure and logistics along with implementation of food safety laws as key components to ensure double -digit growth for the sector while holding deliberations during the meet.
Meanwhile, a report released by CII, in collaboration with Y Factor Marketing Pvt Ltd, reasoned that as processing is low, a significant amount of perishable items get wasted and hence processing needs to be augmented.
Further, the supply chain is multi-layered and leads to large differences between the farm-gate prices and consumer prices. Exports has also not emerged as a major area with most of the food produced being consumed in the country itself.
Abhiram Seth, managing director, Aquagri Processing Pvt Ltd, said, “The industry needs to be more policy-driven than fiscal-driven.”
He pointed out that the processing industry should not limit itself into post-production scenario, but should involve into farming practices so that right variety and yield could be produced.
Seth, however, expressed dissatisfaction over the alleged overreach by the Food Safety and Standards Authority of India (FSSAI) beyond setting standards and stating what to eat and what not?
Rajesh Srivastava, the conference’s chairman, meanwhile, stated that the industry should focus upon increasing processing from the current level of ten per cent to 20 per cent, thereby increasing India’s share in global food trade.
According to the report food processing is still in its infancy, and North India could be a significant player on the national scene, as it is the leading producer of a number of crops such as wheat, mustard, potatoes and sugarcane, and four out of 10 private companies engaged in food processing are based in the northern region, which includes Nestle, GlaxoSmithKline, Kwality Dairy and REI Agro.
New food & retail opportunities
According to the report, rising incomes and increasing urbanisation, along with other driving forces are making profound changes in the food consumption habits of Indian families.
And there is a much greater demand for international cuisines and imported foods. Simultaneously, eating out habits are also changing and developing rapidly, and there is an immense opportunity for the industry to capitalise on the new trends.
New foods are gaining ground with evolution of the health and wellness market. Companies ranging from the agriculture and consumer foods to biotech and pharmacy could tap this market.
Further to add, the Indian food service market was estimated to be worth $48 billion in 2013, and has been projected to grow to $78 billion by 2018 at a compound annual growth rate (CAGR) of 11 per cent. This sector has seen a sustained investment by a number of major players.
Value-added & exports scale-up opportunities
According to the report, with high production, there was an immense opportunity for value-addition, helping expand the export base in world food trade, along with reduction in spoilage.
The report stated that the processing percentage of marine product was a little over 25 per cent, while milk was a highly-processed commodity accounting for 35 per cent. Poultry processing was between 5-10 per cent, while fruit and vegetable processing was at the bottom with less than 5pc.
Fruit and vegetable juices is the area investors could look at. The global fruit juice market was estimated to grow to $90 billion by 2015, while in India vegetable juices have a negligible share.
Mango dominates with a share of almost 90 per cent. Experts opined that orange, pomegranate, orange, apple, chickoo and blends of fruit and vegetables to provide additional growth and diversity to the business.
The report suggested that a higher level of processing and back-end integration were required. Packaging was another aspect that enabled the withstanding of abuse in transit and storage.
India was not amongst the top five agri-product exporters. Smaller countries like Sri Lanka, Kenya, the Netherlands, Japan and Germany were bigger exporters than India. The global food market is estimated to be worth $1,500 billion, and India has an opportunity to double or triple the share in next five years.
Supply chain & logistic opportunity
The report said that the changing scenario in food production, procurement, storage, transportation and distribution was throwing up new challenges for the supply chain, infrastructure and logistics industries.
And a fresh look into these areas would make India more cost-efficient and competitive in the food area and to control costs at the consumer level.
Building cost-effective suitable supply chain elements, the role of overseas technology, refrigeration system, storage solutions and the development of ideal logistics were some areas identified where investment could be done.
The gap between agri-warehousing supply and demand is estimated to 35 million metric tonne (MT). The current capacity of 25 million MT cold storage is barely sufficient for ten per cent of the fruit and vegetables produced in the country.
On food safety laws
The government is in the process of implementing the new legislation (i.e. The Food Safety and Standards Act, 2006 [FSSA, 2006]), and invariably there have been a number of hiccups. Full implementation remains some way off.
However it is in the interest of both the consumers and food business operators (FBO). The report suggested that the objectives behind setting up the FSSAI are laudable, but the implementation of such a complex and far-reaching piece of legislation requires time.
Resources such as trained manpower and testing facilities need to be built, especially in smaller towns.
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