Food processing potential

News: Food processing sector has performed impressively in the past few years on the back of govt support. Even in times of the pandemic, this sector has grown due to the inc in demand for ready-to-consume and home-deliverable foods.

But, it still has a huge untapped potential.

The article throws light on the current situation of the food processing industry in India and issues being faced by the sector.

Why the food processing industry is important to India’s economy?

The food processing industry has emerged as the biggest employer of labour in the manufacturing sector.

– As per the Govt, over 2 million people were engaged in the food processing units in 2018-19 (Annual Survey of Industries data). This means the textiles sector, employing about 1.6 million people, is now at the second position.

This sector has attracted nearly $5.51 billion foreign direct investment between 2014 and 2021. The gross value added in this sector has therefore risen from Rs 1.34 trillion in 2014-15 to Rs 2.24 trillion in 2019-20.

What is the situation wrt food processing in India?

India is the world’s second-largest producer of fruits and vegetables, a sizeable part of which goes to waste for want of processing facilities.

– Currently, hardly 10% of the produce is processed into value-added and shelf life-enhanced products. This compares poorly with the developed countries, where over 80% of the harvest is processed into value-upgraded products.

– Even in several emerging economies, more than a third of the farm produce is processed to prolong its shelf life.

Though India has also set a goal to raise the processing level to 25% by 2025, it can achieve a far more ambitious target if some major constraints faced by this sector are addressed.

What are the challenges being faced?

The lack of supply chain infrastructure, including storage and transportation facilities.

The much-needed preliminary post-harvest treatment of the produce, in terms of cleaning, grading and safe handling, is generally missing. This is vital given that the quality of agricultural produce begins deteriorating immediately after harvest.

Besides, most of the crop varieties planted by the farmers are meant for fresh consumption rather than processing. It is only recently that the plant breeders have begun to churn out crop varieties suited specifically for industrial processing.

The research and development facilities for evolving innovative processed products and convenience foods are also underdeveloped as yet.

On top of that, the food processors have to procure their supplies through the regular marketing channels (read regulated mandis) in most states, which add to the costs besides creating several other problems.

Source: This post is based on the article “Food processing potential” published in Business Standard on 24th Mar 22.