Micro Eco - Food Processing

8/6/2019 Micro Eco - Food Processing

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Food ProcessingFood Processing

IndustryIndustryTeam Param


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Food Processing??Food Processing??

Food processing encompasses all the steps that foodgoes through from the time it is harvested to the time

it arrives on consumers plate - Farm to Fork

Modern food processing has three major aims:

Make food safe for consumption.Provide products of the highest quality.Make food into forms that are convenient.

The Domestic FP Industry - Rs 3,50,000 crores.


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Components of Food ProcessingComponents of Food Processing


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Historical developmentHistorical development

Origin Babylon & Egypt 3000 to 5000 BC Modern FPI Germany Vaccum bottling process to supply food to french army

Eventually leading to canning in tins in 1810 Industry revolutionized in last 30 years

- Hygienics, applied Micro biology

- Mechnical, Chemical , Electronic Engg,

- High- polymer tech The Indian FP dates back to over 500 years

By 19th

Century FPI included - Hand pounding units

- Water power driven Flour mills

Bullock driven Oil Ghanies & Sugarcane Crushers improved machinery was brought from England for demonstration and

adoption Post independence era in India witnessed rapid growth specifically post green

revolution

- Lead by Rice processing & Wheat Milling

- Pulp & milk processing


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Importance & GrowthImportance & Growth

52% cultivable

land compared to

11% world

average

All 15 majorclimates in the

world exist in

India

46 out of 60 soil

types exist in

India

20 agri-climaticregions

Largest livestock

population

Largest producer

of milk

Largest producer

cereals

Second-largestfruit and veg.

producer

Among the top 5 producers

worldwide of rice, wheat,

groundnuts, tea, coffee,

tobacco, spices, sugar and

oilseeds.

Sunshine hours

and day length are

ideally suited for

round the year

cultivation

Significant Opportunity

India as a global

sourcing hub

Ample availability of marine and

fresh water fish through the long

coast line of over 7,000 kms, several

large rivers and lakes


7/25Importance & GrowthImportance & Growth

India - Worlds 2nd largest producer of food , next only to China.

High Potential

Only 2 % ofthe total agriculture & food produce is processed.

Low Cost of Labour : 40 % lower than developed markets.

Industry growing @ 14 %

Deep Market - India ranks 5th in terms of Production, Consumption, export & growthprospects.

Direct Employment Over 44 lakhs.

Investment opportunity - Approx. Rs. 1,20,000 Cr. by 2015

High priority area identified by GOI.


8/25Importance & GrowthImportance & Growth

Food production is likely to double in next 10 year in India.

India waste approx. INR 50K Crores worth of farm products

(sources Dun & Bradstred)

Food Processing sector will help overcome the biggest challengesfacing India.

- Low farmer income and high subsidies

- High wastage along the value chain

- Poor hygiene and safety standards

- Investment of INR 10 billion generates employment for 54,000

people in the food processing sector, jobs for48,000 people in

textiles and employment of 25,000 people in the paper industry.


9/25Market StructureMarket Structure


10/25Major players and their sharesMajor players and their shares


11/25Processed Food Demand DriversProcessed Food Demand Drivers

IncreasingUrbanisation Lifestyle andAspirations

Increasing NuclearFamilies and

Working Women

Increasing spends onhealth foods

FoodProcessing

DemandDrivers

Changingdemographics Rise

in disposableincomes

Demand forFunctional Foods

Organised Retail andPrivate LabelPenetration


12/25Products and export potentialProducts and export potential

** Exports constitutes nearly 5% of the total exports


13/25Products & Export PotentialProducts & Export Potential

Indias Position in Global Trade

India stands a distant 21st for the year 2007, with a 1.7%share in the global trade.

During the period 1980-2007, Indias share in the global

exports have increased from 1.1% to just 1.7%, themajority of the increase happening in this decade.

However, Export of Processed Food and Beverages isgrowing faster than the overall Food and Beverages


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Mergers and AcquisitionsMergers and Acquisitions

Global Deals

US$18.7billion Acquisition of Cadbury by Kraft Foods in September2009.

US$13.4billion acquisition by Coca-Cola of their bottling business inFebruary 2010.

Indian Deals

US$125 million acquisition by Sodexo SA of RadhakrishnaHospitality Services.


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Mergers and AcquisitionsMergers and Acquisitions

Underlying forces for M&A Deals in FoodProcessing Industry.

Cost reductions.

Reducing fragmentation.

Consumer Behavior.

Differing views on prices.

Private Equity.


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Global activities in the industryGlobal activities in the industry

Global Negotiation between Countries in WTO for liberalizing Trade

in Food and Agricultrual Produce.

Food andAgricultural trade liberalization has the greatest potential to raise

food security globally. It

would allow countries to specialize in sectors where they have acomparative advantage,

would remove the specter of agricultural subsidies that work againstcapacity investments in developing economies

would allow free access to markets thereby increasing global trade


17/25Government InitiativesGovernment Initiatives

Food ProcessingIndustry

Infrastructu

re

development

Technology

Upgradation

QualityContr

ol/

Foodtesting

Laboratory,R

&D

HRand

Institutional

Development

Policy Support

HR and Institutional

Development

Financial assistanceto set up trainingcentres

Establishment ofNIFTEM

Strengthening ofState Nodal

Agencies

IT

Infrastructure

Development

Mega Food Parks

Integrated Cold Chain

Modernisation ofAbattoirs

Technology

Upgradation

Grant of 25% of thecost of plant &machinery andtechnical civil(maximum of Rs 50lakhs in generalareas and Rs 75lakhs in difficultareas)

Quality Control/ R&D

Setting up a network oflaboratories

Higher level ofassistance to researchinstitutes

Assistance fororganising promotionalactivities

50-100% subsidy towhich set up qualitytesting laboratories

Supportive Policy, in light of the significant employment and trade potential, toboost the quantity and quality of output in the sector is also driving growth in thesector.


18/25Government InitiativesGovernment Initiatives

Government supportive to the sector

The national policy Aimed at increasing the food processing from 2 per

cent to 10 per cent in 2010 and to 25 per cent in 2025.

Categorized under Priority sector for lending by banks.

Increased Institutional credit to the sector.

Fiscal Incentives

- Full repatriation of profits and capital is allowed.- Automatic approvals for foreign investment up to 100 per cent, except in few cases, and also

technology transfer

- Zero Import duty on capital goods and raw material for 100 per cent export-oriented units.

- Reduced Custom duty on packaging machines reduced.

- Central excise duty on meat, poultry and fish reduced to 8 per cent

- Income tax rebate allowed (100 per cent of profits for five years and 25 per cent of profits for

the next five years) for new industries in fruits and vegetables.


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20/25ChallengesChallenges

Field Losses

(Pest, Diseases, Rodents etc))

Pre-Processing

(e.g. inefficient harvesting, drying, milling)

Transport

(e.g. spillage, leakage)

Storage

(e.g. technical deficiencies)

Processing & Packaging(e.g. excessive peeling, washing)

Marketing

(e.g. spoilage, rotting in stores)

RichCountries

High

losses at a

later stage

in the food

chain

Con

sumer

Pro

ducer

Field Fork

Wastage by Consumer

(e.g. overeating, food wastage)

Developing

Countries

Relatively high

losses in the

initial parts ofthe value chain

Britt-Louise Andersson, SIWI


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22/25SolutionsSolutions

A Dynamic

Food

Processing

Industry

Processable variety

of Crops

Increase

Promotional

Activities

Promote Nutrition

Foods

Support Backward

Integration

Investment in

Hard/Soft

Infrastructure

Market Access to

farmers

Harmonisation of

Taxes

Technology

Upgradation


23/25Industry ExptectationsIndustry Exptectations

Expectations from the Food processing Industry Source KPMG Research

100 percent tax breaks in R&D Large companies are willing to invest in R&D and also

support small scale industries provided the government provides incentives.

Support for nutritional products The industry expects the government to differentiate anutritional product from a non-nutritional product and make laws for labeling andincentives.

Conducive policy for Contract Farming Need a change in the currently restrictive land

ceiling law.

Harmonization of taxes VAT is not uniform across states leading to different prices in

different states.

More incentives in Infrastructure Development Government also needs to share the risksof development and market.

Focus on Skill Development Need for improved focus on establishing training and

education facilities for production technology, warehousing, testing, safety and quality

systems.

Easier Financing to Food Processing Need to enable easier financing possibly with a

separate bank.

Industry expects a lot more support from the government.


24/25RecommendationsRecommendations

Recommendations for the Food processing Industry

Source KPMG Research

More Production of processable varieties to help minimise wastage, improve value

addition and improve farmer income. This requires more investments in qualitysystems, sorting,grading etc.

Promotion of Indian Food in global markets to market India as a brand in FoodProcessing.

Infrastructure development through Private Sector Participation - PSP Implementation of GST - To remove the non-uniformity in indirect taxes. Fiscal incentives for modernisation. Support in meeting export quality norms by training facilities and providing market

intelligence through private bodies and institutes like NIFTEM, CFTRI etc. Extend incentives to players who invest substantial amounts in backward integration

as this helps farmers earn remunerative prices by minimizing middlemen. Promotion of Nutrition Foods Need to make nutritional labeling a must and also

incentivize the players who produce nutrition foods.


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Thank YouThank You

Documents

Micro Eco - Food Processing