Food Processing Industry in India – Challenges & Initiatives

Roughly one third of food produced for the purpose of human consumption is being wasted every year. At the same time one in seven people are going hungry every year. This calls for active measures to prevent food wastage and disbursement of excess food for those in need. The food processing sector not only reduces the food wastage but also adds value to the food produced and provides wide range of employment opportunities.

What is food processing?

• Food processing is the series of methods that seeks to convert raw materials into value added food for the consumption of humans and animals.
• The process usually involves the use of harvested crops or butchered meat to produce attractive, branded, marketable food with long shelf-life.
• The food processing dates back prehistoric times when early humans started roasting, smoking, steaming and baking food products. It further evolved to salting and canning methods prior to the industrialisation.
• Food processing industry is playing a very vital role in the modern era in the fields of Space, warfare, geological exploration etc.
• With increasing urbanisation, many are living far away from the place where the food is originally produced. This increases food wastage and the cost of food is sky-rocketing. The food processing industry helps reduce the wastage and satisfy the demand of the people.
• India with its 16% of its GDP dependent on agriculture sector, must improve its food processing industry to reduce the losses faced by its economy.

What are the methods used for food processing?

The methods used are:

• Removal of unwanted wastes like skins, peels etc.
• Chopping or slicing
• Shredding
• Soaking
• liquefaction
• fermentation
• Emulsification
• Cooking processes like boiling frying etc.
• Addition of gas in food products to increase their shelf life and improve their taste.
• Adding additives and preservatives
• Drying
• Packaging
• Canning
• Pasteurization

What are the advantages of food processing?

• Palatable Food: Maximum foods we consume nowadays are processed. For example, wheat cannot be consumed directly after harvest. The husk, stalk, dirt and debris must be removed and the grains should be washed before it is cooked or made into flour. The modern day cereals are all processed. Thus food processing makes it palatable.
• Nutrients: Certain food processing methods like cooking and freezing can improve or retain the nutrient content of the food. It decreases inequality of nutrient distribution. Cereals have reduced the number of people with low nutrients in Europe.
• Food Safety: Food processing assures the safety of food. Example: pasteurisation of milk, reducing water content of several food items to prevent microbial activity.
• Shelf life: Food processing like drying, cooling and salting assures shelf life of the perishable food items.
• Improve quality & value: Certain microbes like yeast and bacteria are used to increase the quality of food items by improving their tastes, flavour and texture. This provides for increase in the value of the food item. Eg: cakes, breads, alcohols etc.

What are the disadvantages of food processing?

• Food preservatives and additives are added to increase the shelf-life. These are sometimes harmful for few who are allergic to them.
• Sodium benzoate and sulphur dioxide used as additives. These sometimes cause tightness in chests of people who suffers from asthma.
• These additives are found in a few fruit juices, pickles, concentrated soft drinks etc.
• Sweeteners used in low calorie foods may cause rashes to several individuals who are allergic to it.

What are the Upstream and Downstream requirements of food processing industries?

• In order to know the upstream and downstream requirements of the Food processing industries, one must first understand the meaning of the above mentioned terms.
• An Upstream requirement is the needs of the producer or a trader whereas the downstream requirement is the needs for selling of the finished goods i.e., the consumers of that particular good produced.
• For example, for a farmer
  • Fertilizer providers and seed providers come under the upstream side.
  • The traders, cold storage owners, mill owners come under downstream side.
• This change from one individual to another based on perspectives.
• The upstream stage does not involve directly in the food processing. Rather, it search for the required raw materials and extract them to be transported for the processing and value addition.
• The upstream requirements of FPI are:

1. Accessibility
2. Storage facility
3. Transportation
4. Connectivity
5. Quality testing laboratories

• The downstream stage is the when the food is actually processed and is delivered to the consumer market. The requirements of this stage include:

1. New and improved techniques for the processing of food
2. Skilled man power
3. Technologies for the processing of food
4. Quality assurance facilities
5. Well-connected retail markets
6. Accessibility to wider range of consumers.

Why is the Food Processing Industries important for the Indian economy?

• Employment: More than 50% of the Indian population are employed under the Agricultural sector. However India still faces the problems of Poverty and unemployment. Several in agricultural sectors are reeling under disguised unemployment. The emerging food processing industry can bring down these problems.
• Rural development: The rural areas can be developed = increasing migration of the rural people to urban areas in search of livelihood can be reduced.
• Transportation cost: The loss faced by the producers while transporting to the market can be reduced.
• It increases food security.
• Agricultural Exports: It can maintain India’s position of highest exporter of several food items like ginger, mango etc.
• Increase agriculture’s share in GDP: In Indian economy, tertiary sector, though it employs lesser population has the largest share of the GDP. On the other hand, maximum of Indian citizens are employed in the agricultural sector but they contribute lesser share in the GDP. The food processing industry can be the future game changer in this regard by increasing the value of the produce.

What are the challenges faced by the Indian food processing industry?

• The food processing industry accounts for one third of the total food market in India.
• According to a report by Agricultural and Processed Food Products Exports Development Authority (APEDA) food processing industry accounts for 32% of India’s food market.
• However it does face certain hindrances to its growth. They are as follows:

1. Low availability of raw materials: Certain crops are seasonal, thus cause delay in the process. Certain crops like oilseeds are mainly grown by small and medium farmers. These farmers need to have capital for fertilizers, equipment etc., to increase the quality of their produce. However this is difficult as they can’t afford to do so. Certain crops are increasingly dependent on monsoons which are sometimes delayed resulting in poor or no yield.
2. Lack of Storage Infrastructure: Many small scale food processing industries are suffering from shortage of food storage infrastructure that help in storage of raw materials. This results in increased food wastage and loss. The scarcity of space in these infrastructures account for large wastage of the agricultural produce.
3. Lack of adequate connectivity: Certain rural areas are not well connected. Thus the goods produced in these areas take a long time to reach the food processing units. Therefore increase in the connectivity by roads, railways, rivers, airways and shipping is of essence to increase the profit of the farmers and others who are involved in the process. The perishables must be sent to its destination in an efficient manner.
4. Old processes: The foods are usually inspected manually. This should cease in order to reduce human error and time wastage. Technologies must be improved to stay in track with the increasing competition in the global market.
5. Ignorance and human error: Many food items are wasted in daily basis due to carelessness of those who handle them while shifting, packaging, storing transporting etc. this needs to be reduced through efficient and stringent measures.

What are the measures taken to overcome these challenges?

• India cannot afford any wastage of food as, according to FAO, every third malnourished child is an Indian.
• Several measures have been taken by the Indian government like National Food Security Act, 2013 and India Food Banking network. However with the rapid increase in the population, it is of essence for the Indian government to improve the measures for preventing wastage of food.
• Several NGOs are involved in voluntary works that comprises of providing connectivity between producers, food processing units and the market.
• The government is improving the roads to provide rural connectivity.
• The infrastructure that help preserving perishables like freezers are being provided by the government.
• Establishment of Agri-zones and mega food parks.
• Sampada Scheme(Scheme for Agro Marine Processing And Development of Agro-processing clusters): It is an umbrella scheme to supplement agriculture, modernize food processing and decrease agro-wastage. It is meant to encourage entrepreneurship and increase employment up to five lakh people by 2019-2020.
• Mini Food Park Scheme: In order to raise the processing level which is very low the government decided to set up mini food parks. Under the scheme, the items would be directly sourced from the farmers to reduce farm wastage. This is expected to boost farmers income. This scheme would be under the Sampada scheme.
• The government has initiated 16 certificate courses related to food processing to increase the skilled man power.
• Promotion of sales through 100% FDI.
• Encouragement of start-ups and entrepreneurships.
• Indian government had allocated Rs.8000 crore as diary processing infra fund in the union budget 2017-18.
• The Food Safety and Standards Authority of India (FSSAI) plans strengthen the food testing infrastructure of India. It plans to upgrade the existing 59 food testing factories and setting of 62 mobile food testing labs.
• Indian council for fertilizer and nutrient research (ICFNR) plans to improve the research facilities of the fertilizer sector to improve the quantity and quality of the agricultural produce.

What can India learn from around the world with regards to prevention of wastage of food?

• Unorthodox and innovative measures taken by many across the world can be used as a guide to prevent future wastage of food in India. Some of them are:

1. France passed a unanimous legislature that made it mandatory for the supermarkets to either give away the unsold food to charities or to farms for feeding animals or to be used as fertilizers
2. Canada is recovering unused and unspoiled foods from retailers, restaurants, markets and manufacturers in order to give away the excess food to the charities. Due to this, ingredients for about 22,000 meals are available to the charities.
3. 1996 Bill Emerson Good Samaritan Act encourages people to donate food and groceries to non-profit organisations.

Supply chain management (SCM) – What is it and why is it important?

• It is the management of the flow of goods from the producer, manufacturer, retailer and the consumer. This includes all the middlemen involved in the process.
• During the upstream stage, raw materials are collected; stored; preliminary processing is done to preserve it and is sent to the industries that are involved in value additions. During the downstream stage, the manufacturers add value to the raw materials and the finished goods are sent to the whole sale market. The whole sale market sells the goods to the retailers who sell them to the consumers. The consumers use them for their personal consumption.
• During this long and complicated process many goods on their way to their destinations are wasted due to carelessness of those involved. SCM calls for efficient means to reduce the wastage of food while it is delivered to the consumers.

What is the present status of FPIs in India?

• According to the data by Department of Industrial Policies and Promotion (DIPP), the food processing sector received about USD 7.54 billion worth of FDI between April 2000 and March 2017.
• The Confederation of Indian Industries (CII) has estimated that this sector has the potential to attract USD 33 billion worth of investments in the next 10 years.
• This sector contributes about 8.80% and 8.36% of GVA in the manufacturing and agriculture respectively.
• Many e-commerce giants like Swiggy, Zomato, Amazon are increasing their investments in this sector.
• This industry is one of the largest and ranks fifth in terms of production, consumption and export.

Way forward:

• The food processing industries has an enormous potential to boost India’s Economy.
• India with large raw material base in the agricultural sector can overcome the increasing problems poverty and unemployment rate in the rural areas through this sector.
• This sector can help India maintain and improve its position in food exports in the global market.
• Therefore it is of vital importance to take measures to boost the growth and development of these industries through increasing government interventions and policies.

Article by: K.G.Karishma