A Presentation On

1. A Presentation On “Opportunities in Agro-Processing Sector in India ” By Prof. VinodMalkar Sanjivani Rural Education Society, College of Engineering, Dept. of MBA, Kopargaon, Dist: Ahmednagar, Maharashtra, India

2. 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 (Ranakapoor 2010) • This Research will give roadmap for development of food and Agrobase industries.

3. India is the front ranking producer of many perishable commodities Cattle / buffaloes Largest in the world 283 million Milk Largest Producer 91 Mn T F & V #2 in the world 151 Mn T Fisheries Marine: 2.7 Mn T Inland : 3.1 Mn T Food Grains #2 in the world (220 Mn T) Tea Largest Producer (0.85 Mn T) Sugarcane # 2 in the world (245 Mn T) Goat & Sheep 182 million

4. 52% cultivable land compared to 11% world average • All 15 major climates in the world exist in India Significant Opportunity India as a global sourcing hub • 46 out of 60 soil types exist in India • 20 agri-climatic regions • Sunshine hours and day length are ideally suited for round the year cultivation • Among the top five producers worldwide of rice, wheat, groundnuts, tea, coffee, tobacco, spices, sugar and oilseeds. Food Processing Sector in India India has huge supply advantages due to diverse agro-climatic conditions and wide ranging raw material base…

5. Field Losses (Pest, Diseases, Rodents etc)) Rich Countries – High losses at a later stage in the food chain Developing Countries – Relatively high losses in the initial parts of the value chain Producer 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) Consumer Wastage by Consumer (e.g. overeating, food wastage) Britt-Louise Andersson, SIWI Field Fork Food Processing Sector in India Huge wastage across the supply chain leads to lower level of processing and hence low value addition…

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

8. India’s competitiveness in global markets Source: UN COMTRADE Statistics, World Bank Staff Estimates

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. South Asia Middle East East Asia Western Europe Rest of the World USA & Canada Africa 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. Increasing spends on health foods Increasing Nuclear Families and Working Women Increasing Urbanisation – Lifestyle and Aspirations Food Processing Demand Drivers Changing demographics – Rise in disposable incomes Demand for Functional Foods Organised Retail and Private Label Penetration Industry Growth Drivers - DemandUrbanisation, rise in disposable incomes and changing lifestyle and aspirations are leading to significant demand for processed food…

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. 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 Challenges in the Sector Challenge 2: R&D Key Problems in Indian R&D • A seven-step mechanism is required to set-up a research-development-technology transfer continuum involving all stakeholders • Problem identification and prioritization • Convergence of existing technologies to match the need • Generation of need-based viable technologies using the holistic farming system approach • On-farm assessment and evaluation • Feedback on the technologies • Refinement of technologies, if necessary • Ensuring timely availability of inputs

14. Industry level Regulatory and trade issues Warehousing & Distribution Enforcement Food production • Emphasize food safety in storage conditions • Training in Warehousing and Distribution • Managerial and Operational level HRD • Platform to make policy decisions • Inclusion in academic curriculum • Food safety awareness • Auditing and inspection skills • Process development • Institutional Development • Focus on packaging techniques, storage and safe transportation Challenges in the SectorChallenge 3: Human Resource Development 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 Seasonality Seasonal production Vs Year-round Processing Operations Perishability Highly perishable nature of raw materials Variability Variable quality of raw materials due to cyclic variations and changing weather conditions • 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.

16. Increasing Globalisation Stringent Safety Norms Rising Customer awareness on Quality and Health 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 • 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. Key Opportunities Mega Food Parks Food Safety Management Systems Quality Control Labs Integrated Cold Chain Training Facilities Joint Research Facilities Backward and Forward Integration B2B Sales Customised Farm Equipment Opportunities High domestic demand and supportive policy provides significant opportunities across the Food Processing value chain…

19. This is not an end …… Thanks for your attention!