About food-processing industry: Food growers can be processors too

Source: The post is based on the article “Food growers can be processors too” published in the Business Standard on 17th October 2022.

Syllabus: GS 3 – Food Processing and Related Industries in India

Relevance: About the present state of India’s food-processing industry(FPIs)

News: The food-processing industry, despite impressive growth over the past few years, has failed to effectively serve its prime objectives of bolstering farmers’ incomes and curtailing wastage of farm produce.

About the present state of India’s food-processing industry(FPIs)

Given that India is among the world’s top producers of many key farm commodities. The country ranks first in the production of milk; second in that of fruit, vegetables and fisheries; and third in eggs. It also produces a variety of health foods and therapeutically important herbs which can be processed into nutritious snacks and other kinds of high-value products for domestic and export markets.

The gross value added (GVA) of the food-processing sector has surged from Rs 1.34 trillion in 2014-15 to Rs 2.37 trillion in 2020-21.

What are the various initiatives taken by the government to improve the FPIs?

A favourable policy environment is said to have played a major role in the rapid expansion of this sector.

-The government has allowed 100% foreign direct investment under the automatic route for manufacturing and retail trading, including e-commerce, of food products made in India.

-Besides, it has extended the Production-Linked Incentive Scheme to this industry to impart further impetus to its growth.

–Pradhan Mantri Kisan SAMPADA Yojana

–PM-Formalisation of Micro Food Processing Enterprises Scheme

What are the challenges associated with the present state of India’s food-processing industry?

a) The gains from the value-addition of agricultural products are accruing largely to the industry rather than the farmers, b) The post-harvest losses of farm output continue to be rather high — up to 40% in some perishable items. In monetary terms, these losses are assessed at Rs 60,000-80,000 crore annually, c) Hardly 10% of the farm harvest is subjected to some kind of value-enhancing treatment or processing and d) The obligation of processing units to procure raw material from markets operated by agricultural produce marketing committees (regulated mandis).

What are the reasons for the present state of India’s food-processing industry?

This can be attributed to numerous reasons, such as a) Inept post-harvest handling, transportation, storage, and marketing the produce; b) A low level of on-farm processing to enhance the value and extend the shelf-life of the harvested stuff; and c) lack of direct linkage between growers and processors.

Why do small and micro food-processing units economically more viable than the larger ones?

This is because, a) The perishable and seasonal nature of farm produce and its scattered availability in small lots; b) Paucity of commodity-specific warehousing and transportation facilities; and c) The issues related to product quality, especially in terms of its suitability for processing.

What needs to be done to improve the present state of India’s food-processing industry?

a) Value-enhancing treatment needs to be stepped up substantially, at least to 25%, to reduce spoilage, and facilitate the year-round availability of seasonal agricultural products. It will generate additional income for farmers and off-farm employment and entrepreneurship opportunities for rural people, b) Promote small-scale and village-level agro-processing units even while continuing to support the organised sector food-processing industry, and c) Farmers need to be encouraged to set up mini or micro agro-processing centres, individually or collectively, through cooperatives or farmers’ producer organisations.