Food Processing Industry: Next revolution in India with right focus and support


India is the world’s second largest producer of food with potential of being the biggest, backed by its food and agricultural sector. The food processing industry is one of the largest industries in India and is ranked fifth in terms of production, consumption, export and expected growth. The total food production in India is likely to double in the next 10 years with the country’s domestic food market estimated to reach $258 billion by 2015.

Presently, the Indian food processing industry accounts for 32% of the country’s total food market. To promote food processing industries in India, the Ministry of Food Processing Industries (MoFPI), the nodal ministry of the Government of India, which envisages tripling the size of the processed food sector by increasing the level of processing of perishables from 6% to 20%, value addition from 20% to 35% and share in global food trade from 1.5% to 3%, by 2015. The MoFPI has a clear goal of attaining these objectives by facilitating and acting as a catalyst to attract quality investments from within India and abroad into this sector with the aim of making food processing a national initiative.

Harsimrat Kaur Badal, a Member of Parliament for the second term and a member of many parliamentary committees, took over as the Union Minister for Food Processing Industries on May 27. Taking over as minister, she said her mission will be to find new and innovative ways to reduce the post-harvest losses by facilitating efficient storage and transportation as well as finding ways to increase the shelf life of food products while at the same time ensuring that these processed food products are available to the consumers across the country at reasonable prices. In her first media interview with NuFFooDS Spectrum, she shared her vision of the ministry and challenges to overcome.

What is your vision for the food processing industry in India?

The food processing industry in India has got huge potential and it is still untapped. It is probably going to be the next revolution in our country, if given the right kind of support and focus. Prime Minister has made food processing as a separate ministry from agriculture and it shows that the focus is there. Now, thrust in funds is needed to create the infrastructure as food processing can happen only with proper infrastructure.

As food processing grows, it will automatically take farmers along with it. Good crop, assured crop is useful for processing industry. If the industry will invest in technology and seeds for the farmers around them it will uplift the farmers as they also will get better technology which they cannot afford. Good technology, good seeds for better harvest, better yield and assured price and assured lifting.

A farmer who does not know at what price his crop is going to sell or where he is going to sell it, price and selling are reassured. It integrates with processing industry. Our aim is to have per acre better crop, better yield. We have to improve our yield because population is growing and land is shrinking. We have to be more scientific in our growth and in consump- tion of water.

At the same time we need to look at training our people. Each processing cluster can become a hub for skill training. About 65% of our youth are under 35. They need jobs to support their families. The government’s focus is on empowering the youth by skill training. But to get admission to skill training center also one needs some basic qualification.

The food processing industry is such where even an illiterate person from a village can start learning some skills such as cleaning, grading, washing, sorting etc. Some kind of incentive can be given to the industry, on which I am working on, for training more and more youth.

A skilled youth force is a huge asset rather than the unskilled liability of youth that we have today. So, look at what it can do for the farmers and look at what it can do for the youth. If you drive this processing industry, it can actually drive the growth besides the revenue that is going to earn.

Another aim of my ministry is to somehow reduce the food wastage due to unprocessed foods, which is directly responsible for inflation. To reduce the wastage we first need to have food map, which tells us exactly which part of the country what is being grown and where it is in surplus, what infrastructure is required to reduce wastage.

Wastage takes place during harvest and transportation. There is 30% wastage across the globe, but the difference is that in western countries the wastage is more on the plates, while in our country it is more at harvest and transportation level.

My aim is clearly to bring down the wastage of food and vegetable by providing necessary infrastructure to store and process these foods so instead of being wasted a) it is consumed and b) the farmers get a better price rate. When there is abundance of food, often farmers have to resort to throwing it on the road or letting it rot as it does not fetch him even the cost price. That is why when there is a glut, it needs to be picked up, stored in cold storage and processed.

So when there is a shortage, which is usually between July and December and food and vegetable prices rise, there should be an option of buying the processed food practically at the same price. Make the processed food from ‘khaas aadmi’s’ food to be ‘aam aadmi’s.’

For doing that, we need to have a food map. Figure out exactly which food and which vegetable is in excess, in which part of the country, what is the shortage of infrastructure there and then connect that infrastructure so that it becomes a cold chain. That way where there is a surplus, you connect it directly where there is a shortage.

What are the current issues or challenges related to the food processing industry?

Across the industry I get to hear that the biggest challenge is Food Safety and Standards Authority of India (FSSAI). It does not come under my ministry. But what I hear from the industry is that the businessmen, processing industry, were facing a lot of trouble as there were many hassles in creating new products, getting timely clearances and importing ingredients to make those products better. Sometimes I tend to feel that systems are there to restrict the growth of the industry.

Big companies, who have their reputation at stake, are the ones where innovation etc. is getting restricted because of the system. We need to overhaul the system. I think, eventually what the food processing industry is looking at is that international standards like Codex be adopted by India. If these standards are good enough for the rest of the world I am sure they should be good for our country. And if there are some products, which are not suitable for our people, the con- cerned ministry or FSSAI could make a negative list.

Our aim should be to upgrade our system to international standards. So, worldwide for imports and exports it can become a level playing field for Indian industry.

Besides these there are some local issues also. Electricity is one issue that is affecting the industry. It is a major component, even for starting anything related to infrastructure of food processing. And that is a state subject. There are certain states where a lot of food is grown and the lot is wasted also, but there is no electricity. It becomes a major hurdle. That is
why I am trying to tie up with power ministry to see if we can somehow subsidise solar energy.

So at least for storage and processing there is an option. We are going to work out the minimum storage space required and how many megawatts are needed for that, what will be the cost. Then we will talk to the power ministry to figure out a way around that. Eventually we have to assess our infrastructure being self-reliant even if there is no electricity. Otherwise, we will never meet our targets.

Like electricity, another issue that affects the industry is land, which also is an essential component. What are your plans to remove this hurdle?

When we were studying mega food parks and why it did not take off, we realised that land is an issue for the food processing industry. Setting up a food park in 50 acres is an issue. Now, I am trying to change the scheme to make it viable for investors. At the end of the day one should not be restricted by land. The aim is to stop wastage of land. I feel in a particular area the person has to make his unit work for the whole year. For that he has to find one of the non-perishables like rice or wheat over there and in those areas there is bound to be a fruit or a vegetable, which comes in another season of the year. So, a unit which has common facilities of processing perishable fruits, vegetables as well as non-perishables.

The flexibility is there for an entrepreneur, whether he wants to set up a processing unit of a single product and then off season just store and keep processing or he wants seasonal for eight months of the year or he wants to then lease it out and have other people keep that storage over there. We should be flexible. The whole idea is to provide infrastructure and enable the processing and storing at a level so that wastage goes down. So, I am going to come up with the new scheme soon. Sometimes parks take land for 50 or 90 years lease, then further leased out to oth- ers. The sub-leasing is an issue also.

The mega food park is there and I am looking at cluster complex. Getting 50 acres in hilly areas is out of the question. So the scheme for the North Eastern region and hilly areas is not a viable option. The new scheme gives a flexibility to an entrepreneur to set up a processing unit in a way that he feels is beneficial to him by minimising the wastage.

It is said due to lack of proper guidelines, many global companies are not keen on investing in India in the areas such as warehousing and cold chain management etc. What kind of incentives will be offered?

In the food processing industry standards need to be maintained, still innovation is very flexible. It is not like drugs where guidelines are clear. In case of food processing, the industry wants and even I think we should accept international standards. Unless we accept those standards, our products will never be ready in time to compete in the international market.

Accepting that will increase export options and innovations also. Putting restrictions on imports, in a way allow the companies to invest in innovations and develop products which enhance the shelf life, or give a better flavour. I feel accepting international standards would increase the development of our products and will also help in investments here by global companies.

Government food testing labs are in bad condition. There are problems of equipment and non-availability of trained manpower etc. What steps are you taking to solve this problem? No doubt there is shortage of proper labs. And the quality of the labs to be of a certain standard. The ministry is working towards that into getting this aggregation. But getting it and then maintaining it is where the challenge is. There is no doubt that we need to work more on those lines.

Some people in the industry feel that like IT revolution, India can be hub of food testing business for entire Asia. Do you see such a possibility?

Before the food testing revolution, we should first see the food processing revolution. There is almost Rs 44,000 crore worth of food that is wasted every year. I feel that too is a conservative amount.

Looking at the growing population and the amount of food getting wasted, it is something that needs to be handled at a very critical level. So, our first challenge is going to be to stop this wastage and turn the wastage into processed food. And then the next challenge is making that available at the affordable price for an ‘aam aadmi’. 

We first have to set up that infrastructure in place and then of course the labs will be testing these foods. First the food and vegetable processing industry has to grow. A lot of these labs do not get enough business also. One reason for there not being that many labs is because they are not able to meet the two ends meet. 

That is going to happen as the processing industry grows. The farmer is going to grow as the processing industry grows. The same way the labs are going to grow. It is all interlinked in a way.

No doubt, we can become a huge Asian hub for food testing, but we have enough potential within our own country being the second largest population and probably the maximum amount of food is also growing in our country. We are one of the largest growers of fruits and vegetables and rice and wheat perishables and non-perishables. Thus, we have a huge potential for our own country. 

Of the various sub-sectors which sectors you feel need more thrust?

In the processing sector, dairy has done the best performance and poultry has done pretty well. Dairy has been given thrust by lot of incentives. Even in this budget the Finance Minister has announced many incentives which is going to propel the growth.

The worst is fruits and vegetables. That has only 3 or 4% processing. Processing is one of the fastest growing industry, more than agriculture and services sector. And just the fact that only 3 or 4% fruits and vegetables are processed goes to show the huge potential.

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