by Sunanda K. Chavan on Friday 24 December 2010, 12:11 PM | Category: Strategy| View: 2898 views

“food processing & agribusiness- transforming india” Plenary session: -The indian share of the global food market



Ground reality – a study in contrast

Second highest producer of milk

Organized dairy accounts for only 13% of milk produced

Only 70,000 Ton cold storage capacity for 90 million Tones produced

Poor yield per cow

Second largest cattle population

5500 registered & 25770 unregistered slaughter house with no chilling, freezing & cold storage facility as hot  meat market prevails

Ground reality

Fifth largest producer of eggs

Poultry meat sold as hot in retail market

Sixth largest producer of fish

20 – 30% damage and no cold storage facility in WB, AP, Goa

Low processing

2.20 % in fruits

35 % in milk

6 % in poultry

Value addition – 20%

India's current share in world trade of processed foods – 1.60 %

Poor lab to land transfer of technology and adoption of new varieties. example of pineapple

Ground reality

Market surplus of fruits & vegetables – 88%

Farmer sells immediately due to perishability  & absence of proper infrastructure to keep it for longer period

Post Harvest wastage of fruits & vegetables – 25 to 35% valued at over Rs 45,000 crore

Losses as above in India is more than consumption of same in UK

Market surplus of food grains– 60%

Farmer keeps some for own consumption, seed purpose and to give to labour as wages

Loss in above equal to annual food grain production in Australia

Cost of wastage 6 times amount spent on food subsidy

Farm gate price 25% of domestic consumer retail price against 50% in developed countries

Story of Fyffee PLc  - in Banana Handling and Processing on the ships before final destination of selling.

Key Drivers – To be a Global Agri Super Power

Role of Key Drivers

Is India Ready to be a Global Power?

Challenges And Strategy For Future …. Food processing

Utilisation of scarce resources – MORE CROP PER DROP, power etc

Varying taste preference within the country

Increasing International Competition

Non tariff barriers

Integrated Food law to remove multiplicity of food laws & regulatory agencies


Low level of value addition

Bottle necks in cold storage including during transit

Seasonality – capacity utilization issues e.g. Himachal apples 2006-07 prod was half of 2005-06

Non Efficient storage/warehousing, processing & marketing techniques

Non adoption of efficient technology

Infrastructure and others

Shortage of power

High electricity tariff

Low area under Irrigation

High capital cost -Inadequate institutional finance at low rates

High insurance premium in risk coverage

Farm connectivity by road yet to take off


Quality and consistency at grass root levels

Inputs delivery not in time

Innumerable varieties

Poor procurement and logistics

Lack of cheap and timely credit

Weak and ineffective supply chain

Non professional management

Low revenue rentals

Non Efficient and competitive retailing

High wastage

Agri supply chain – a comparison with Developed countries

Challenges - Hurdles towards Value addition

Wide disparity between peak & lean period arrivals usually ranging from 100 – 150%

Long revenue cycle as products to be purchased in bulk during peak season

Control of markets by few traders and agents who command large storage capacity

Discouragement of farmer – lower returns act as disincentive

Crashing of prices during peak season

Larger intermediaries exerts negative pressure on farmer margin, and deteriorates quality due to multiple handling

Bottle-necks in Cold storage & Processing industry

Higher Tax duties including on packaging material

Lower capacity utilisation

Role of cold storage etc – current utilisation 48% of capacity

5100 units with 216 lakh MT capacity

Non adoptive of cost effective  technology

High working capital requirement

High cost of finance

Infrastructural constraints

Dependence on intermediaries – inadequate farmer – processor linkages

India A land of opportunities

52% cultivable land as against 11% world wide

Unsurpassed Natural Advantages

All the 15 major climates of the world

46 out of the 60 soil types

17% animal, 12% plant and 10% fish genetic resource of the world Food processing sector ranks fifth in terms of contribution to GDP

Indian urban food market estimated at 350,000 crore

Estimated investment in Food processing sector during 11th plan – 1 lakh crore

Road to Evergreen revolution …….

Horticulture crops – Fruits vegetables and flowers cover 7% of cropped area of the country

India ranks First in production of mango (65% of world) Bananas (11% of world) and papayas

India ranks Second in production of Lime and lemon

Exports quantity increased 4 times & value 10 times in last 15 years

Move to invest in 10 mega food parks in the country

Indian food processing industry averaging a growth of 10%

Can India be a sourcing hub for food products?

Good governance

Strong, Stable and reform oriented government

WTO signatory

Strong economy comparatively resilient to the current economic crisis

Focus on improving the Road connectivity

Vision to solve the power situation – Nuclear energy

Improving relationship with neighboring countries and a more important role in the WORLD ORDER

Focus on agriculture & rural sector

Has  a Strong agriculture base

Increased out lay for rural spend

Rural economy to be give the next big push to GDP

Annual rural income to increase from 2.8% to 3.6% over next 2 years

Indian growth story …….

Strong Corporate leadership

Indian is already …….

IT Hub of the world

Auto and auto ancillary hub to the world

Telecom hub

Acquiring global companies

India managers at the Helm of many Fortune 500 companies

Impetus by Govt

Included in the list of Priority sector lending by banks since 1999

Most of processed food Exempted from purview of licensing under the industries (Development & regulation) Act, 1951, except items reserved for small scale sector & alcoholic beverages

Excise duty for processed fruits & vegetables, food mixes etc. – NIL

Excise duty on reefer vans reduced from 16 to 8%

Reduction in customs duty on food processing machinery

Tax breaks

Move towards GST

Towards being the 5th largest consumer market by 2025

Large young earning population

50% of population under 25 years of age

Ready to experiment and try out new products

Increase in number of upper middle class & middle class by 159 % & 63 % respectively

Urban population projected at 40% by 2020

Middle class of 200 – 250 million spread across the country to increase to 580 million by 2025

Dual income households

Higher disposable incomes

Ready to try out value added products

Reduction of wastage /spoilage to be tackled on a war footing

Accelerated establishment of cold chain networks

Irradiation facilities and pest free warehouses

Encourage SSI units and corporate to set up food processing units

Improvement of productivity – both land and manpower

Example the case of Rubber where India has the highest land productivity in the world

Change in cultivation practices such as irrigation for paddy rather than method of flooding the fields

Price stability

Make farming remunerative to attract talent and retain farmer interest

Incentives to Corporate to enter core farming – land ceiling restrictions

Increase Mechanizat

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