PROBLEMS FACED BY FOOD PROCESSING UNIT

Presented by:Avie Brar L-2k10-BS-02-MBA(AB)

INTRODUCTION
India is the worlds second largest producer of food next to China, and has the potential of being the biggest with the food and agricultural sector. The food processing industry is one of the largest industries in India-it is ranked fifth in terms of production, consumption, export and expected growth. Termed as a perfect ingredient for any industry -large disposable. The proportionate expenditure on cereals, pulses, edible oil, sugar, salt and spices declines as households climb the expenditure classes in urban India while the opposite happens in the case of milk and milk products, meat, egg and fish, fruits and beverages.

 Food processing is a large sector that covers activities such as agriculture, horticulture, plantation, animal husbandry and fisheries. It also includes other industries that use agriculture inputs for manufacturing of edible products. The Ministry of Food Processing, Government of India indicates the following segments within the Food Processing industry: i. Dairy, fruits & vegetable processing ii. Grain processing iii. Meat & poultry processing iv. Fisheries v. Consumer foods including packaged foods, beverages and packaged drinking water.

An overview of Indian Agriculture

(Production side)
Comparative advantages:

Second largest arable land in the world Diverse agro-climatic zones across the country, Round the year sunshine Potential to cultivate a vast range of agricultural products Large marketable surpluses and abundant raw material for processing Vast pool of skilled manpower in research and extension

These advantages being leveraged, for India to be a leading food supplier to the world.

Area and production of Agricultural products

(Production in million tonnes)

India Arable Land Irrigated Land Wheat Rice, Paddy Coarse grains (including maize)
(Million ha) (Million ha)

Indias Rank in World Production 2 1 2 2 3

151 55 72 124 29

Milk
Fruits Vegetables Edible Oilseeds

91
47 82 25

1
2 2 3

Pulses
Sugarcane Tea Cattle
(million)

15
245 0.85 186

1
2 1 2

India is the front ranking producer of many perishable commodities

China : $195 bn;

USA : $150 bn;

India - $105 bn.

India produces 41% of worlds mango, 23% of Banana, 24 % of cashew nut, 10% of onion, 30% of cauliflower, 36% of Green Peas.

India has 53% of worlds buffal and 17% of goat

And a 8000 km of coastline

Agriculture scenario
Foodgrains production - 241 million tonnes (MT) in 2011 crop year, Milk production in 2011- 121.7 million tonnes Fish Production -7.8 million tonnes Vegetable Production - 141.3 million tonnes Fruit production - 75.7 million tonnes

The major issues to be addressed are as under: Large size of population is still dependent on agriculture Lower growth in farmers income(1.5%) and higher growth in expenditure (4-5%) Increasing indebtedness of farmers & suicidal rates Value addition is only in 8% of total food production Only 2.2% of the horticulture products are processed, while upto 35% fruits & vegetables are spoiled. Only few secondary agriculture industries exist and most of the agro-industries are unorganised. Low Consumption of value added fruits & vegetables compared to fresh fruits and vegetables and the inclination towards processed foods is mostly visible in urban centers.

Existing Status of Processing in India

Fruits & Vegetables 2.5%, Milk 40%, Poultry - 6 to10 %, Marine products 8 to 10 %, Wastage Rs. 75000 Rs. 100,000 crore

Segmentation of different sectors in food processing industry:-

India rising high on food demand curve

Evolution of global food demand
Diet / functional / organic foods C onvenience foods Snacks / prepared meals Dairy, meat, fresh fruits fruit juices, beverages Carbohydrate staples
Africa (SubSaharan) Eastern Europe Nortth America, Japan, Western Europe, Australia

India , China, Latin America

Surviving
11

Mass Market

Convenience Quality Food Service Hygiene Snacking

High Technolo

Levels of Value Addition

Level- 1 : Post Harvest level/ Primary Processing: Proper Cleaning, grading and Packaging particularly of fruits and vegetables Level-2 : Secondary processing (basic processing, packaging and branding) of post harvest produces particularly of foodgrains (i.e. Atta. Suji, Besan, etc.) & milk produce.

Level- 3 : High- End Processing (Complex processing technologies, equipment finance and global in nature).

Present Scenario in Value Chain

Cost Build Up For One Kg. Basket Of Fruit

2.5 11.6

1.7 4.1 3.3 FARMER TRADER WHOLESALER

RETAILER

Retail Markups
100 160 220

CONSUMER PRICE

350

13 FARM

GATE PRICES

MILK

FISH

FRUITS &VEGETABLES

Though the industry is large in size, it is still at a nascent stage in terms of development of the country's total agriculture and food produce, only 2 per cent is processed. The industry size has been estimated at US$ 70 billion by the Ministry of Food Processing, Government of India. The food processing industry contributed 6.3 per cent to Indias GDP in 2003 and had a share of 6 per cent in total industrial production. The industry employs 1.6 million workers directly.

Value addition of food products is expected to increase from the current 8 per cent to 35 per cent by the end of 2025. Fruit & vegetable processing, which is currently around 2 per cent of total production will increase to 25 per cent by 2025.

The highest share of processed food is in the dairy sector, where 37 per cent of the total produce is processed, of this only 15 per cent is processed by the organized sector. The food processing industry in the country is on track to ensure profitability in the coming decades. The sector is expected to attract phenomenal investments of about Rs 1,400 billion in the next decade.

PROBLEMS
Lack of suitable infrastructure in the shape of cold chain, packaging centres, value added centre, modernized abattoirs etc. Partially liberalized overall policy regime, with specific incentives for high priority food processing sector, provide a very unconducive environment for investments and exports in the sector A very small percentage of raw material are processed into value added products. Multiplicity of Food laws In the dairy sector, most of the processing is done by the unorganized sector.

 Lack of appropriate crossbreeds while conserving indigenous breeds of livestock

Very less no. of livestock marketing system

Rural backyard poultry is not promoted in a cooperative marketing setup

Undeveloped cooperative dairy firms

Lack of extension services

Very less no. of private veterinary clinic There is no framework for utilizing synergy between restoration and creation of water bodies for water harvesting and fishery There is no provision of an insurance package to avoid distress

 Due to seasonality ,there is a non availability of raw material in time Deterioration of Post Harvesting Very Less no of Domestic market esp. In rural Areas. Poor quality standards are being practiced while procurement of raw material which lead to rejection of order when it fails to meet International standard.e.g. 3 exporters licenses from Amritsar were cancelled by USA as the wheat they were exporting were unhygienic. Till recent times, food processing units are being neglected by the Govt. of India There are very less number of trained employees in food processing units to carry out the operations

Strengths and opportunities that India enjoys

It is the seventh largest country, with extensive administrative structure and independent judiciary, a sound financial & infrastructural network and above all a stable and thriving democracy Due to its diverse agro-climatic conditions, it has a wide-ranging and large raw material base suitable for food processing industries. Presently a very small percentage of these are processed into value added products

It is one of the biggest emerging markets, with over 1 billion population and a 250 million strong middle class
Rapid urbanization, increased literacy and rising per capita income, have all caused rapid growth and changes in demand patterns, leading to tremendous new opportunities for exploiting the large latent market. An average Indian spends about 50 per cent of household expenditure on food items

 Demand for processed/convenience food is constantly on the rise

India's comparatively cheaper workforce can be effectively utilized to setup large low cost production bases for domestic and export markets Liberalized overall policy regime, with specific incentives for high priority food processing sector, provide a very conducive environment for investments and exports in the sector Very good investment opportunities exist in many areas of food processing industries, the important ones being : fruit & vegetable processing, meat, fish & poultry processing, packaged, convenience food and drinks, milk products etc.

SUGGESTIONS
- Linkage between Banking & Technology Providers may help in developing the techno-economic project profiles, leading to bankable proposals for the prospective entrepreneurs. - SHGs may be assisted in making traditional foods as per standardized norms, with proper training and financial back up. These groups may be trained at technology providing institutions and NABARD and FIs may be involved in this process.

Posting data on daily basis Creating awareness on the information portal Suggest user-friendly formats for data dissemination Utilization of funds for market led extension

Some major companies in Food Processing are: Dabur India Ltd Gitz Food Products Pvt. Ltd Godrej Industries Ltd Haldiram Marketing Pvt. Ltd Britannia Industries Ltd Hindustan Unilever Limited (HUL) Parle Agro Private Ltd ITC Ltd. Agro Tech Foods PepsiCo IndiaPvt. Ltd Cadbury India Ltd Nestle India Pvt. Ltd.

Scope of Agro & Food Processing in PUNJAB State

Processing and packing of edible oils Fruit and vegetable processing, branding, packing and storage e.g. Kinnow are being sorted and packed in boxes before delivery to urban market from Abohar Cereals processing and micronutrient fortification Spices processing for export.e.g turmeric are packed in plastic Sachets after grinding into powder form.e.g GG foods,Rampura Milk Processing e.g. true milk Poultry Processing Egg powder units Meat Processing Processing of Medicinal and Aromatic crops Processing of Organic Foods