Food Processing Industries

8/9/2019 Food Processing Industries

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FUNDAMENTALS OF AGRI-BUSINESS

ASSIGNMENTON

FOOD PROCESSING INDUSTRIES OF INDIA

SUBMITTED BY:

Tengkam G. MominMuniram Prasad Sharma


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FOOD PROCESSING INDUSTRIES

Introduction:

Food Processing Industries or Sectors are the indispensible elements for

the overall development of an economy. It provides a vital linkage andsynergy between the agriculture and industry. It helps in commercialising,

diversifying and sustaining the agricultural sector by enhancing the income of

the farmers, by providing the market opportunities for the agricultural products

intended for exports and by absorbing the employment problem by generatingemployment opportunities. The Agricultural produce can be sold or exported

to far off places for earning revenues and as such these industries play a

serious role.The Food Processing Industry sector in India is one of the largest

in terms of production, consumption, export and growth prospects.


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Meaning of Food Processing:

The term 'food processing' is mainly defined as a process of value

addition to the agricultural or horticultural produce by various methods like

grading, sorting and packaging. In other words, it 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. It covers spectrum of products from sub-sectors

comprising agriculture, horticulture, plantation, animal husbandry andfisheries.


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Indian Scenario:

The changing pattern of living and lifestyle of the Indian people hasgenerated new avenues for the growth and prosperity of these Industries.Urbanisation has supported a lot and the consumers demand for quality food products at a convenient and better way have compelled these industries to

adapt changes arising due to the demand scenario by adopting newertechnologies.The Indian food processing industry is one of the largest in theworld in terms of production, consumption, export and growth prospects.Earlier, food processing was largely confined to the food preservation,packaging and transportation, which mainly involved salting, curdling, drying, pickling, etc. However, over the years, with emerging new markets andtechnologies, the sector has widened its scope. It has started producing manynew items like ready-to-eat food, beverages, processed and frozen fruit and


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vegetable products, marine and meat products, etc. It also includeestablishment of post-harvest infrastructure for processing of various fooditems like cold storage facilities, food parks, packaging centres, value addedcentres, irradiation facilities and modernised abattoir.

India has a strong agricultural production base with diverse agro-climaticconditions and arable land of 184 million hectares. It is one of the major foodproducers in the world and has abundant availability of wide variety of crops,fruits, vegetables, flowers, live-stock and seafood. As per the availableinformation, it produces annually 90 million tonnes of milk (highest in theworld); 150 million tonnes of fruits and vegetables (second largest); 485million livestock (largest); 204 million tonnes of food grains (third largest); 6.3million tonnes of fish (third largest); 489 million poultry and 45,200 millioneggs. As a result, Indian food processing industry has become an attractive

destination for investors the world over.


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The total inflow of foreign direct investment (FDI), year-wise, in foodprocessing sector during the period 2000-01 to 2007-08 (up to November2007)is as follows:

(Source: Annual Report 2007-08, Ministry of Food Processing Industries)

Year Foreign Direct Investment (Rs. in Crores)

2000-01 0198.13

2001-02 1036.12

2002-03 0176.53

2003-04 0510.85

2004-05 0174.08

2005-06 0182.94

2006-07 0441.00

2007-08 (up to November 2007) 0061.63

Grand Total 2781.28


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Key Growth Drivers of Food Processing Sector in India:

Increasing spending on health and nutritional foods.

Increasing number of nuclear families and working women

Changing lifestyle

Functional foods, fresh or processed foods

Organised retail and private label penetration

Changing demographics and rising disposable incomes

Indian food processing industry is widely recognized as a 'sunrise industry'having huge potential for uplifting agricultural economy, creation of large

scale processed food manufacturing and food chain facilities, and the resultant

generation of employment and export earnings. The industry is estimated to be


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worth around US$ 67 billion and employing about 13 million people directlyand about 35 million people indirectly. The food processing sector in India is

geared to meet the international standards. Food Safety and Standards

Authority of India has the mandate to develop standards and also to harmonise

the same with International Standards consistent with food hygiene and foodsafety requirement and to the conditions of India's food industry.

Increased urbanization, improved standards of living, and the convenience

needs of dual income families point to major market potentialities in the food

processing and marketing sectors. This is also evident from the presence of

several global foods giants and leading Indian industrial enterprises in the

country's food processing sector, such as: Nestle India Ltd, Cadbury's India

Ltd, Kelloggs India, Hindustan Lever Ltd, ITC-Agro, Godrej Foods and MTR

Foods Ltd Besides, in the current globalized milieu, our surplus food

production, as well as the increasing preference for Indian foods (in several


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regions of the world) need to be leveraged to achieve economic, and strategicobjectives through exports.

Opportunities in Food processing Sector:

Processable varieties of crop

Contract farming

Investments in infrastructure through Public Private Partnership (PPP)

Mega Food parks

Integrated cold chain

Food safety Management Systems


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Important segments in Food Processing Industries ( Exports and

Turnover figures ):

Fruits and Vegetables Processing (In 2008-09, India's export of fresh fruit andvegetable was estimated at US$ 0.79 billion and in case of processed fruits andvegetables it stood at US$ 0.68 billion.)

Meat Processing (In 2008-09, India's export of meat products (including

buffalo meat, sheep/goat meat, poultry products, animal casings and processedmeat) stood at U$ 1.25 billion.)

Diary Processing (In 2008-09, export of dairy products was estimated at US$

0.21 billion.)

Fisheries Sectors (The export of marine products has steadily grown over the

years - from a mere US$ 0.84 million in 1961-62 to US$ 1,849.08 million in


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2008-09. Marine products account for approximately 1.1 % of the total exportsfrom India.)

Grain Processing Sectors (Export of oil meals, oilseeds, minor oils (fats) and

castor oil during the financial year 2007-08 is reported at 62.6 lakh tonnes

valued at US$ 2.32 billion against the exports of 58.9 lakh tonnes valued atUS$ 1.39 billion in the previous year.)

Consumer Food Industries (India's biscuits industry is the largest among all

the food industries and has a turnover of around US$ 0.64 billion)

Major Players in Indian Food processing:

ITC Limited

Parle Products Pvt. Ltd.

Agro Tech Foods

Amul


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Perfetti India Ltd.

Cadbury India Ltd.

PepsiCo India Holdings

Nestle India Pvt. Ltd.

Britannia Industries Ltd.

Hindustan Lever Limited

Milkfood

MTR Foods Limited

Godrej Industries Limited

Gits Food Products Pvt. Ltd.

Dabur India Ltd.


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Unilever

Conagra Foods

Nissin FoodsWalmart Venky's

Constraints:

While the food-processing sector offers several opportunities, it facesconstraints as well, such as:

Low income and the high share of basic food in the household consumption

expenditure which acts as a deterrent in the growth of processed food sector.


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Socio cultural factors such as preference in India for freshly plucked/cookedfood, variation in food habits across the country, easy availability of rawmaterials for cooking, preference for consumption of food at home etc.

Low productivity, high wastage.

Inadequate infrastructure for sorting, grading, packing etc. in addition to thehigh cost of raw material (at processors level).

APMC Act which restricts sourcing materials from farmers.

Lack of a common policy on Contract farming.

Lack of trained man power for various stages of processing, storage,

marketing and branding.

Lack of access to modern technology.


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Low share of sale of food products through organized retail, which are theusual drivers of quality, scale and integration. Globally 72 %, or more of foodsales, is through organized retail. Share in India is just one percent. The highproportion of unorganized sale leads to low product quality, low hygiene levels

and safety.

Access to Credit for farmers as well as small and medium food processors isa key issue. Over 75% rely on informal credit at very high interest rates

leading to increase in cost of production affecting competitiveness.

Inability to attract investment by large corporate houses who complain ofunreliable sources of supply of raw material.

Inability to induce investor confidence.


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Low inflow of Foreign Direct Investment, in spite of the permission for100% FDI in the food processing sector (except in food retailing, alcoholicbeverages and plantations).

Inability of Government Schemes to have the desired impact on productivity,

technology and market arrivals. Advantages of low price at farm gate for raw materials not available toprocessors, affecting international competition.


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Conclusion:

To conclude, Food Processing Industries or Sectors form an

integral part of our economy. It is one of the main components of

export-oriented industries who have changed the overall developmentscenario of the Indian economy by exporting the produce from the

processed agricultural products and earning foreign exchange and also

absorbing employment problem to a certain extent possible. In the

present context, its contribution cannot go unseen and many foreign

companies and investors have vested their interest in venturing in these

sectors in India by investing in these sectors and industries.

Documents

Food Processing Industries