By Amaar Naraen, Staff Correspondent          

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The rapid and giant strides made by India in some sectors have touched the food processing industry. A growing industry, it has the potential to put the country firmly on the food map of the world, in the process turning it into the planet’s food factory. And, if experts are to be believed, the food factory will open its doors in the next few years. As a ripple effect, the sector will be responsible for bringing about huge investments and employment opportunities.

For those who are unaware, the country is, incidentally, the world’s largest producer of tea and milk and is the second largest producer of fruits and vegetables, rice and sugar. But it is unfortunate that despite the large production, India is not a dominant force in the world market with the exception of tea.

To begin with, the food processing industry is one of the top ranking industries in the country. It employs an estimated 1.6 million workers – a fifth of the country’s industrial labour force – and accounts for 14 percent of the total industrial output and 18 percent of GDP. Says the new Minister for Food Processing, Mr Subodh Kant Sahay, “For the healthy development of the Food Processing industry, several issues that have a direct bearing on the industry need to be taken into consideration. One is the harmonization of food legislation and taxation of food. While farm productivity has to be increased, care should also be taken to minimize wastage.”

Although India is the world’s third largest food producer, after China and the USA, the combined turnover of its ten largest food companies is Rs 10,000 crore (approx. CAD 2.8 trillion). The truth is that the markets for the products on which India’s food companies have concentrated – value-added items like breakfast cereals, jams, and sauces – are very small because these are niche products. The big, largely untapped, opportunity lies with mass-market products – packaged atta (flour), biscuits, poultry, and milk – which could eventually account for more than 80 percent of the total market.

According to Mr Sahay, two factors have brought about a distinct change in food consumption patterns. The first and most important, of course, is rising incomes, which will enable those not so well-off to emulate city diets. The second is experimentation in eating that has come about because of the wide choice available nowadays. An analysis of the development of eating patterns across 20 countries shows that they go through a distinct evolutionary process.

The first stage of the process – prevalent in most developing countries – is obtaining basic foods for survival: cereals, fats, oils, fruit, and vegetables. The next stage comes when the per capita income increases and the diet witnesses the addition of milk, eggs and non-vegetarian foods. The last stage in the process is seen when the regular diet sees a wide choice and quality.

In a country like India, all three stages are present. While those with low incomes move from the first stage to the second, the upper-income groups travel from the second to the last stage. According to food industry pandits, the shift from the first to the second will be seen in the coming few years. This will bring about a change in the eating habits of the masses since the number of those in the first stage will grow by 2005. The number of households will grow by 14 percent though the premium segment will grow by 150 percent, amounting to around 2.5 million new households.

The Minister is upset over the fact that a large part of the country’s fruits and vegetables is wasted because of the lack of food processing facilities and infrastructure. He is not alone. Industry experts have often voiced their concern over the Indian food industry’s infrastructure-related problems like non-availability of specialized transportation and poorly kept roads in the country, which result in damage during transportation. Even the railway system, which is otherwise quite good, is not good for free container movements from the hinterlands. To top it all, facilities for handling food products at ports are also inadequate and obsolete. To compound the problems further, a cold chain of refrigeration units for preservation of food products is virtually nonexistent.

The new government has taken the initiative to iron out the major problems facing the fruit and vegetable industry. The presence of a large number of intermediaries involved in delivering these products from the farms to the homes of consumers has queered the pitch. While in most other countries, the farmers offer their produce to wholesalers, who in turn sell it to retailers; in India, however, the situation is totally different. There are any number of traders, wholesalers and intermediaries who delay the arrival of fruits and vegetables; result: huge losses in the process. Says Mr Sahay, “The time has come when we have to start increasing agricultural yields by giving good seeds to farmers. The agriculture sector needs technological support for growing and harvesting of crops”.

Facilities for post-harvest handling also have to be improved by providing for better packing of products and facilities for storage and handling. These will include a wide network of cold chains to store seafood, poultry and meat items. Providing for better transport systems will also ease transit and improve the delivery rate of food products. The system of storing food-grains in gunny bags in godown and in the open leads to about 10 percent wastage of food-grains. At this estimate, of an average 200 million tonnes of actual production, we lose 20 million tonnes of food grain.

Mr Sahay has a major task on his hands to ensure that the food processing industry becomes a major employment generator. One of the biggest drawbacks is that around 75 percent of the industry is in the unorganised sector. There is, therefore, all the more reason for technological assistance and know-how to be provided to small and medium farmers across the country. The minister believes that the poor quality of Indian agricultural produce is entirely due to the lack of awareness of international consumer preferences. Our farmers have little or no idea about pesticides or developments in the farming sector in other nations.

That is, perhaps, the main reason why despite India’s large yields, the food sector has not made any significant impact on the export figures of the country. Take Canada for example. Over the years, tastes in Canada have changed significantly with consumers looking for nutritional food in eco-friendly packing. All packaged foods sold in Canada contain information about the product on the package. In addition, there is great demand for organic foods cultivated by natural processes. While such changes are becoming apparent in the Indian food sector, bringing it at par with international standards is still a long way off. The country still does not have facilities for biodegradable and eco-friendly packaging of food.

The low agricultural yields are responsible for a major part of the farmers’ problems. Most key products, according to agricultural experts, are around 25 to 40 percent below world standards. Strangely, in milk, fruit and vegetables, where India leads the world, the production is less than 40 percent of the world’s best. In comparison with China, though India has 75 percent more cultivable land, our production is around 30 percent lower. The reasons for such low yields are due to seeds and breeding. The country does not have the required research facilities. The farming techniques are obsolete. Along with the poor production, the wastage and loss of value has forced India’s food sector in a low investment area. The Ministry of Food Processing will have to transform the whole sector and build bridges with agriculture.

According to ministry estimates, the size of the Processed Food Industry stands at Rs 1440 bn (approx. CAD 40 trillion). The major share is taken by the unorganized, small players (process less than 0.5 tons per day), which process more than 75 percent of the industry’s output in terms of volume. The Processed Food Industry ranks fifth in size in the country representing around six percent of GDP and accounts for 13 percent of the country’s exports. The industry employs 1.6 million workers. Now that the government has focused on the sector, the country could see some rapid changes taking place.

 
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