The Gist of Kurukshetra: August 2014

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The Gist of Kurukshetra: August 2014

Employment Opportunities in Food Processing Industry for Rural Areas

Agriculture is gradually losing the attraction of a potential occupation with the rural youth due to lower profitability. If farming can be augmented with additional income generated from agri-based industries, it will help to retain the interest of the youth in farming. Such agri-based industries should be centred in the rural hubs so that rural youth is retained in the rural areas. We have to keep in mind that 68.9 per cent of the population in our country lives in 6.40 lakh villages.

Though share of agriculture to overall GDP in India has come down to 14 per cent, still 66.2 per cent of rural males and 81.6 per cent of rural females are engaged in agriculture as cultivators or labourers. Thus, agriculture based industries are very important for creating value addition in our agricultural produce and also for creating enormous job opportunities for the rural youth. This is one of the largest sectors in the global economy (USD 7 Trillion) and it is going through a transition phase in India. We produce greater than 600 million tons of food in all.

Processing of fruits and vegetables is only 2 per cent in India in comparison to 80 per cent in USA and Malaysia, 78 per cent in Philippines, 70 per cent in France and Brazil, 40 per cent in China and 30 per cent in Thailand. Food Processing Sector is an important segment of the economy, constituting a share of around 9.0 to 10.0 percent of GDP in agriculture. Food and food products are the biggest consumption category in India, with spending on food accounting for nearly 21 per cent of India’s GDP and with a market size of Rs. 9,050 billion.

The food and agro processing industry employed over 16 per cent of total workforce in the organized manufacturing sector whereas it is 32 per cent of the total workforce in the unorganized sector. In total numbers, the industry employs 13 million people directly and 35 million people indirect. For the project growth in the Food Processing Industry, it is expected that the requirement of human resources would be about 17.8 million in 2022.

Scope for the Growth of the Industry

There are many factors which highlight the growth potential of food processing industry. An average Indian spends around 53 per cent of his/her income on food. We have about 300 million upper middle class consumers for value added foods. Due to changing prospective economic scenario 200 million Indians are in a transition zone from lower economic status to upper middle class levels. The domestic market for processed foods is not only huge but is growing fast in tandem with the economy. It is estimated to be worth $90 billion. India’s domestic food processing market was US $ 157 in the financial year 2012-13 and is estimated to reach US $ 258 billion by 2015. Various studies have estimated post production losses in food commodities to the tune of Rs. 75,000-1,00,000 crore per annum. According to a new report by Emerson Climate Technologies India- a subsidiary of US-based manufacturing and technology company Emerson, wastage of fruits, vegetables and grains in India is pegged at INR 440 billion annually. Fruits and vegetables account for the largest portion of that wastage.

Future Strategies

The Government has adopted a Vision Document 2015 which has suggested strategy to ensure faster growth in this sector. The vision document outline the priority to enhance the level of processing of perishables to 20 per cent, enhancing value addition to 35 per cent and India’s share in food processing to 3 per cent by the year 2015. The Ministry of Food Processing estimates that our country would need USD 24.7 billion worth of investment to restructure the industry and to lift share of global processed food trade to just 3 per cent. To promote private sector activity and invite foreign investments in the sector the Government allows 100 per cent FDI in the food processing & cold chain infrastructure. As per the Annual Survey of Industries (2010-11), the Fixed Capital in Food Processing industry stood at Rs. 1,20,705 Crore growing at an AAGR of 21.66 per cent during 2006-07 to 2010-11. The sector grew at a compounded growth rate of 9 per cent between 2008 and 2012, much abovethe3 percent growth rate for agriculture. An essential part of the programme is the flagship Mega Food Parks Scheme and 10 such projects are already in the pipeline across the country. Each of these parks is expected to generate 30,000 direct jobs and several times of it in indirect opportunities. The National Mission on Food Processing (NMFP) was approved in 2013 with formulation of guidelines to states. Ministry of Food Processing Industries is implementing a scheme for Human Resource Development in the Food Processing Sector.

The HRD Scheme focuses on developing technologists, managers, entrepreneurs and manpower for quality management in food processing. The scheme provides assistance for creation of infrastructure facilities in academic institutions and for setting up of Food Processing and Training Centres (FPTC). There are also two academic-cum-research institutions under this Ministry viz. National Institute of Food Technology Entrepreneurship & Management (NIFTEM) at Kundli, Sonepat, Haryana and the Indian Institute of Crop Processing Technology (IICPT) at Thanjavur, Tamil Nadu, which offer academic programmes at Bachelors, Masters and Ph.D Levels in food processing.

Gray Areas which Need Attention

Dairy product is another area where there is enormous potential. No doubt the country has made tremendous strides in the last 20 years in production and processing of milk and milk products. But the fact remains that only 15 per cent of all the milk produced is processed. Today, a large number of people suffer from diabetic or cardiac ailments and availability of fat free milk, fat free curd and sugar free food is poor. A simple product like soya milk is not produced in adequate quantity. Fish and shrimp have good export potential but there is an immense lack of cold storage and modern processing facilities: For instance fish production is around six million tonnes a year and the frozen storage capacity spread over 500 units is only one lakh tonnes.

Constraints in the Growth of Food Processing Industries

  1. Long and fragmented supply chain: Food processing industry needs uninterrupted supply of raw material to sustain the production schedule. But, diversity in crop profiles and farm size are the limiting factors to ensure the continuous supply of quality and uniform raw material. In addition, high level of wastages as the product reaches the manufacturing base and unwanted cost additions with minimal value additions are also worrying factors.

  2. Inadequate cold storage and warehousing facilities: India’s existing food cold storage facilities can accommodate 21.7 million tons of produce compared to a requirement for more than 31m tons which indicates a shortfall of 10m tons of cold storage facilities for agriculture produce. Also, cold storage facilities now available are mostly for single commodity like potato, orange, apple, grapes, pomegranate and flowers etc. which result in poor capacity utilization. Without a strong and dependable cold chain vital sector like food processing industry which is based mostly on perishable products cannot survive and grow. Warehousing which is a key requirement in the overall supply chain, is mostly dominated by unorganized players.

  3. Challenge related to logistics: Road infrastructure in India still faces challenges related to quality and connectivity. Indian national highways account for only 2 per cent of the total road network but carry 40 per cent of all cargo. This puts a lot of pressure on the highways due to high traffic volumes and accordingly, results in delays in transit.

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