NAFED to contribute and promote ‘International Year of the Millet’ 2023 on global scale
India’s food production industry is worth over $400 billion and is the primary source of livelihood for 45 per cent of the country’s population. India is the second largest producer of agricultural products (after China) according to a report by Boston Consulting Group (BCG) in association with the Federation of Indian Chambers of Commerce & Industry (FICCI). However, India lags behind peers in the higher-level processing of food products across categories.
Also, despite India’s strong position in agri-production, the country trails others in the export of food products. According to reports by the United Nations, India’s share of agri-production is 9.5 per cent globally, while its share in the export of overall food products is 2-3 per cent – with share in the export of processed food category being even lower at 1-2 per cent.
According to the provisional data released by the Directorate General of Commercial Intelligence and Statistics (DGCI&S), the overall export of agricultural and processed food products increased to $9.6 billion in April-July 2022 from $7.4 billion over the same period of the last fiscal. The exports of agricultural and processed food products rose by 30 per cent in the first four months of the current financial year 2022-23 (April-July) in comparison to the corresponding period of FY 2021-22. For the year 2022-23, India has set an export target of $23.56 billion for its agricultural and processed food products basket.
On the other hand, the US is ranked as the largest exporter of food (excluding fish) with $124 billion (10 per cent of the total), followed by the Netherlands ($79 billion, or 6 per cent) and Brazil ($73 billion, or 6 per cent), as per reports in 2020.
“India is the largest producer of dairy but ranks 46th in terms of export. Similarly, India is the second largest producer of vegetables but ranks 15th in exports. Thus, it is crucial that the industry as a whole, along with all stakeholders across the value chain, come together and make concerted efforts in this direction, and achieve a position of supremacy in processed food exports,” says Hemant Malik Chairman- FICCI Food Processing Committee & Chief Executive Officer- Food Division, ITC.
However, the Indian food processing industry is currently facing some key challenges that need to be addressed to enable it to achieve its export potential. While India is considered a low-cost market given its relatively lower labour costs, processed food products are generally not cost competitive in the global markets due to the high cost of agri-produce. For instance, the cost of milk production in India is 1.5x higher than in New Zealand. The cost of tomato production in India is around 2x higher compared with China, driven by lower productivity.
Another major challenge relates to concerns about product quality, driven primarily by the poor standard of India’s agri-produce. India is ranked 46th in terms of consumer preference for quality. In 2018, the European Commission reduced the maximum permissible residue levels for Tricyclazole- a fungicide to 0.01 parts per million (ppm) from 1 ppm for all crops. According to the Trade Promotion Council of India, the Indian farmers, due to the excessive usage of Tricyclazole, were unable to comply with these norms resulting in a drastic drop in exports in FY 2019 vs FY 2018. In terms of Infrastructure, although India has been able to substantially build its storage requirements as of 2022, the storage capacity developed over the years is not distributed well. About 70 per cent cold storage capacity in India is limited to four states, while some states with large export potential do not have adequate facilities. Further, producers of perishable items need storage capacity at the farmgate level – the absence of which forces them to sell produce at a throwaway price when the same is sold in cities at a high price. Thus, investment is needed to rationally increase the storage capacity, as well as to undertake the modernisation of existing storage units.
Click here to read the full story….
Image credit- shutterstock