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A Presentation On
“Opportunities in Agro-Processing Sector in India ”
By
Prof. Vinod Malkar
Sanjivani Rural Education Society,College of Engineering, Dept. of MBA,
Kopargaon, Dist: Ahmednagar, Maharashtra, India 1
Introduction• India is one of the biggest emerging markets, with over 1.2
billion population and a 300 million strong middle class. • India with a land area of 2.97 million sq. km., 180 million
hectares of arable land (one tenth of the world), 56 million hectares irrigated land.
• India is the second largest food producer in the world and having potential to become first.
• But fruits and vegetables just about 2.2 per cent of the production is processed compared to 30 per cent in Thailand and close to 80 per cent in Philippines and Malaysia.
• It is estimated that a one per cent growth in food processing has the potential to generate an additional direct employment for five lakh people, and indirect employment for 15 lakh individuals (Rana kapoor 2010)
• This Research will give roadmap for development of food and Agrobase industries.
3
MilkLargest Producer91 Mn T
F & V#2 in the world151 Mn T
Food Grains#2 in the world(220 Mn T)
Cattle / buffaloesLargest in the world283 million
TeaLargest Producer(0.85 Mn T)Sugarcane
# 2 in the world(245 Mn T) Goat & Sheep
182 million
FisheriesMarine: 2.7 Mn TInland : 3.1 Mn T
India is the front ranking producer of many perishable commodities
4
Food Processing Sector in India India has huge supply advantages due to diverse agro-
climatic conditions and wide ranging raw material base…
• 52% cultivable land compared to 11% world average
• All 15 major climates in the world exist in India
• 46 out of 60 soil types exist in India
• 20 agri-climatic regions
• Among the top five producers worldwide of rice, wheat, groundnuts, tea, coffee, tobacco, spices, sugar and oilseeds.
• Sunshine hours and day length are ideally suited for round the year cultivation
Significant Opportunity
India as a global sourcing hub
5
Food Processing Sector in India Huge wastage across the supply chain leads to lower level of processing and hence low value addition…
Field Losses (Pest, Diseases, Rodents etc))
Pre-Processing(e.g. inefficient harvesting, drying, milling)
Transport(e.g. spillage, leakage)
Storage(e.g. technical deficiencies)
Processing & Packaging
(e.g. excessive peeling, washing)
Marketing(e.g. spoilage, rotting in stores)
Rich Countries – High losses at a later stage in the food chain
Co
nsu
mer
Pro
du
cer
Field Fork
Wastage by Consumer(e.g. overeating, food wastage)
Developing Countries – Relatively high losses in the initial parts of the value chain
Britt-Louise Andersson, SIWI
6
Some Identified problems …
Infrastructure for marketing of perishables Primary grading/ collection centers - non existent
Warehousing and cold storage - inadequate
Cold chain - non existent
Quality certification system - non existent
Transportation for perishables - non existent
Rural markets - complete lack of infrastructure
Wholesale markets - in government control, lack modern facilities
Private / direct markets - not permitted
Post harvest losses: 25 to 30 % in perishables
7
Level of Processing across Segments
Segment
India
Other Countries
Fruits and Vegetables
2.2%US A (65 %), Philippines (78%)
China (23)%;
Marine 26%
60-70% in developed countries
Poultry 6%
Buffalo Meat
20%
Milk 35%60-75% in developed countries
15%
11%
0% 5% 10% 15% 20%
Fruits
Vegetables
India's share in global production (2001-03)
63%
53%
0% 20% 40% 60% 80% 100%
Fruits
Vegetables
Indian prices as a % of world prices (2001-03)
0.5%
1.7%
0.4%
2.1%
0% 2% 4% 6% 8% 10%
Fruits
Vegetables
India's share in global exports
(2001-03)
(1991-93)
Source: UN COMTRADE Statistics, World Bank Staff Estimates
India’s competitiveness in global markets
9
Indian Food Trade Supported by a committed government in improving the food trade and providing a
conducive atmosphere for agriculture, India is a net exporter of agricultural products. …India’s Position in Global Trade
• India stands a distant 21st for the year 2007, with a 1.4% share in the global trade.
• During the period 1980-2007, India’s share in the global exports have increased from 1.1% to just 1.4%, the majority of the increase happening in this decade.
• However, Export of Processed Food and Beverages is growing faster than the overall Food and Beverages…
10
34%
29%
17%
10%
7%
1%1%0%
5%
10%
15%
20%
25%
30%
35%
40%
0 2000 4000 6000 8000 10000 12000 14000
Distance (Kms)
Share
of Tra
de
South Asia
Middle East
East Asia
Western Europe
Rest of the WorldUSA & CanadaAfrica
Indian Food Trade India exports mostly to the proximate
countries…
India’s geographical situation gives it the unique advantage of connectivity to Europe, the Middle East, Japan, Singapore, Thailand, Malaysia and Korea.
Globally, most of the countries import from countries that are geographically closer.
• For example, 45% of USA imports are from Canada and Mexico.• EU imports 50% from Spain, Netherlands, France, Italy, Belgium and Germany
11
Industry Growth Drivers - DemandUrbanisation, rise in disposable incomes and changing
lifestyle and aspirations are leading to significant demand for processed food…
Increasing Urbanisation – Lifestyle and Aspirations
Increasing Nuclear Families and Working Women
Increasing spends on health foods
Food Processing Demand Drivers
Changing demographics – Rise in disposable incomes
Demand for Functional Foods
Organised Retail and Private Label Penetration
12
Challenges in the Sector Challenge 1: Productivity Issues
India's overall agriculture productivity is still low…Source: Innovative technology to ensure food security, UNI (United News of India), 25 March 2009
13
Challenges in the Sector Challenge 2: R&D
Commodity-centric R&D Lack of a holistic approach involving a matrix of farm enterprises
Compartmentalization of R&D agencies
Lack of effective bilateral flow of information amongst research, extension, and implementation departments
Poor validation and feedback mechanisms
Lack of large-scale on-farm validation of techniques and feedback thereon, leading to practically no scope for enhancement
Key Problems in Indian R&D
A seven-step mechanism is required to set-up a research-development-technology transfer continuum involving all stakeholders
1. Problem identification and prioritization
2. Convergence of existing technologies to match the need
3. Generation of need-based viable technologies using the holistic farming system approach
4. On-farm assessment and evaluation
5. Feedback on the technologies
6. Refinement of technologies, if necessary
7. Ensuring timely availability of inputs
14
Challenges in the Sector Challenge 3: Human Resource
Development
Warehousing & Distribution
Industry level
Enforcement
Regulatory and trade issues
Food production• Food safety awareness
• Auditing and inspection skills
• Process development
• Managerial and Operational level HRD
• Institutional Development
• Focus on packaging techniques, storage and safe transportation
• Platform to make policy decisions
• Inclusion in academic curriculum
• Emphasize food safety in storage conditions
• Training in Warehousing and Distribution
The industry is in direct need of highly skilled/trained manpower across different levels to handle various operations
15
Challenges in the Sector Challenge 4: Supply Chain Hindrances
Necessity for a Strategic focus on Supply Chain in FPI
• This situation discourages processing units to reach optimum size and achieve economies of scale.
• Additionally, lack of consistent quality hinders small scale units to build brand equity for themselves in international and domestic markets.
Seasonality
Perishability
Variability
Seasonal production Vs Year-round Processing Operations
Highly perishable nature of raw materials
Variable quality of raw materials due to cyclic variations and changing weather conditions
16
Challenges in the Sector Challenge 5: Low Adherence to Quality
Standards
Increasing need for food processors to adhere to quality standards for both domestic as well as export market
Increasing GlobalisationStringent Safety Norms Rising Customer awareness on Quality and Health
• Lack of requisite controls across the agri-value chain-from farm inputs to storage of produce to food processing techniques
• Poor compliance to requisite food standards in export countries
• Absence of basic standardization and certification infrastructure
17
Opportunities Food Processing sector has strong synergies with the inclusive growth mandate of the government
and also provides a platform to significantly transform the face of rural India…
A developed Food Processing sector will help overcome the biggest challenges in front of India:
• Low farmer income and high subsidies
• High wastage along the value chain
• Poor hygiene and safety standards
Given the huge potential opportunity, players should consider the constraints as opportunities waiting to be exploited and make investments for the overall growth of the industry.
18
Opportunities High domestic demand and supportive policy provides
significant opportunities across the Food Processing value chain…
Financial & Business Services
Farm Inputs FarmingMarketing/ Aggregator
ProcessingLogistics (Food)
Retail/ Food
ServicesConsumer
Product Design
Distribution
MarketingTransport Services/ Infrastructure
Quality Control Market Intelligence
Policy Support
Financial & Business Services
Farm Inputs FarmingMarketing/ Aggregator
ProcessingLogistics (Food)
Retail/ Food
ServicesFarm Inputs Farming
Marketing/ Aggregator
ProcessingLogistics (Food)
Retail/ Food
ServicesConsumer
Product Design
Distribution
Marketing
Product Design
Distribution
MarketingTransport Services/ Infrastructure
Quality Control Market Intelligence
Policy Support
Key Opportunities
Mega Food Parks
Integrated Cold Chain
Backward and Forward Integration
Food Safety Management Systems
Training Facilities
B2B Sales
Quality Control Labs
Joint Research Facilities
Customised Farm Equipment
Thanks for your attention!
This is not an end ……This is not an end ……