Food Processing Industry and Rural Development
The importance of the food processing industry cannot be overstated as it is the link industry between agriculture and manufacturing.
At present, the sector constituted as much as 8.98 percent and 11.11 percent of GVA in the manufacturing and agriculture sectors respectively. It employs the largest number of persons, not just in the formal sector, where it constitutes 12.38 percent of registered employees, but also in the informal sector. As per the Ministry of Food Processing, women’s share of employment in registered food processing industries stood at 12.6 percent of total employment, whereas the number in the unregistered industries was almost a double and stood at 24.7 percent.
The sector can contribute immensely to the empowerment of farmers, especially females, by providing improved bargaining power to them, leading to reduction in distress sales and ensuring steady supply to the processors.
Present Scenario
Increasing consumption, with rising incomes, is seeing demand for branded products rise as well demand for healthier products. growth of organised retail, are other drivers of consumer demand in this industry.
However, India is performing below its latent potential of becoming a food export hub in the post-pandemic era. Despite being the second largest producer of cereals, fruits and vegetables and fish and in fact the largest producer of milk, however, when it comes to processing this produce, India processes less than 10 percent of its total output
Exports also remain below potential. Despite India being one of the largest producers of agricultural commodities in the world, agricultural exports as a share of total exports are low in India (10 percent of India’s total exports globally top 5 exporting nations account for 34 percent share in export of food products). India is 14th largest exporter in the world with only 2 percent share in global export of food products.
Issues
• At the farm level, due to lack of awareness among the producers, the output lacks quality and safety standards.
• There is also a lack of processable varieties which is another bottleneck.
• Aggregation centers close to the farmgate are also lacking.
• Private investments were lacking.
• There are poor number of packhouses, where produce is graded and sorted, critical for quality control.
• Gaps exist in the availability of refrigerated vehicles to transport perishable produce.
Government Initiatives
• Dedicated funds have been launched to develop infrastructure at all levels. The Agriculture Infrastructure Fund (AIF), with a corpus of Rs. 1 lakh crore, aims at developing infrastructure at the farmgate level and aggregation points, boosting pre-processing and primary processing capabilities.
• A dedicated Animal Husbandry Development Fund and the Pradhan Mantri Matsya Sampada Yojana have been launched as part of the AatmaNirbhar Bharat Abhiyaan.
• Government has formed 10,000 Farmer producer organisations (FPOs) which offer the benefits of aggregating farmers, with a modern corporate structure, allowing the spirit of cooperatives, that drove India’s White Revolution to be maintained with more transparency and accountability. Aggregating farmers in through FPOs enhances their bargaining power, both in terms of purchasing inputs and also selling their produce
• The Operation Green was extended from tomatoes, onions, and potatoes to 22 perishable commodities.
• In terms of foreign investment, 100 percent FDI is allowed under automatic route in food processing industries, 100 percent FDI in manufacture of food products and for trading (including e-commerce). FDIs can bring in the much-required tech infusion across the value chain which can help reduce wastage, maintain quality, and enhance shelf life of food products.
• Other schemes are: Pradhan Mantri Kisan Sampada Yojana, PM – Formalisation of Micro Food Enterprises (PM-FME) scheme, One District One Product, etc.
• Depleting soil health and water tables have the potential to impact production and hence food security going ahead. Interventions are required to shift towards more sustainable forms of production, such as substituting flood irrigation with micro-irrigation, promoting balanced use of fertilisers and judicious use of pesticides.
• Diversification of farm produce and investments in the cold chain are critical.
To ensure robust development of the sector, the demand side requires a sharp focus. But with lifestyle becoming fast-paced, a change in consumption behaviour can be seen wherein more and more consumers are shifting to processed food options. Consumers are increasingly demanding healthier options and traceability in their produce; therefore, the product development can be made consumer centric by taking the same into consideration.
There is a huge potential abroad which still needs to be tapped. For this, the production needs to be made export oriented. This would require adherence to global quality standards. While there are many globally accepted quality standards such as Codex Alimentarius standards, many developed countries have relatively stringent health standards than the internationally accepted ones to protect their nations against possible health hazards from imports from developing countries.
Conclusion
The impact of the food processing sector on the economy is wide ranging. The sector can contribute immensely to the empowerment of farmers, especially females, by providing improved bargaining power to them, leading to reduction in distress sales and ensuring steady supply to the processors. It provides farmers the access to formal lending, apart from support from various government schemes.