Food processing grows rapidly in India’s farms
Through World Food India, India is welcoming the world to transform the food economy along the food value chain
India’s farms are seeing a silent revolution. Horticulture produce has been outpacing grain output, cold chains are finally coming up and global food companies are beginning to take note of the potential of the Indian market.
With over a billion people who could be potential consumers, few should doubt the opportunity that the Indian market presents. Data confirms that when the sector has done well, it has managed to outperform the growth of manufacturing as well and the industrial sector. That could be just one of the several reasons why India, aided by policy changes and investments by industry, could be on the cusp of a food processing revolution.
The early sign of the big change is showing up in numbers from the agricultural fields. India’s horticulture production has grown at nearly 4.76% in the last five years, higher than 3.09% registered by the food grain output. The country’s farmers are now getting ready with more produce that could be processed and served to the consumers.
Over the last three years, seven mega food parks have become functional while 25 such parks across the country have been given approvals. Nearly 109 cold chains, long considered the weakest link for India’s food processing sector, are now operational. Another 133 cold chains have received approvals.
There have been a number of policy measures to encourage investors. 100% foreign direct investment in trading of food products produced and manufactured in India is now a reality.
The government wants manufacturing units to help develop the value chain up to the farmer, cutting down on waste of agricultural produce and also getting more food to be processed for abundant availability for consumers, while containing price inflation.
SAMPADA (Scheme for Agro-Marine Processing and Development of Agro-processing Clusters) has an allocation of Rs. 6,000 crore, hoping to develop modern infrastructure with efficient supply chain management and from the farm gate to the retail stores.
Each stage of the food processing chain will be addressed through the scheme, creating huge employment opportunities in non-urban areas as well. The target for the scheme is to benefit 20 lakh farmers and generate 5.30 lakh direct and indirect jobs by 2019-20.
India’s has earned the tag of being the world’s fastest growing major economy. States are now competing in creating better infrastructure that encourages industries and job creation. India is also committed to improving its position in the ease of doing business, which is a top priority for the government. The potential in India is amazing. With just 10% of its agricultural produce being processed, India has a large potential to go up in agriculture value chain.
India is also getting more urban. The changing face of India’s population will also need to consume more ready -to -eat products to suit its changing lifestyles. More Indians are travelling around the world and would also like to consume the products that they see. However, some of the revolution may already be visible to urban consumers on the shelves of popular retail outlets. The government would like to see the real impact of this change to be visible beyond the urban centres so that the potential of the opportunity can be fully realised.
With nearly 13% (nearly 17 lakh people) employed by registered food processing units, there is little doubt that it could be a driver for India’s consumption growth in the near future. If the unregistered units are stacked up, nearly 48 lakh people are employed in the sector, according to NSSO data.
At World Food India 2017 (WFI), 50 CEOs and over 200 international companies are participating. Ministerial/official delegation from thirteen countries and business delegation from 15 countries will be face to face with 28 states to make it India’s biggest food processing industry event. Several global corporations are trying to integrate their operations to India’s agricultural sector, like what is being called the ‘fruit circular economy’.
For the success of government policy, industry’s efforts will need to go hand in hand. Product innovations and developing new categories for the Indian consumer will be needed. If processed food and beverages can reach over one billion Indians, it has the potential to reinvigorate India’s economy like never before. It will also help meet the Prime Minister’s vision of doubling farmers’ income by 2022.
If it were to be summed up in one line, add investments, subtract the worries, multiply the growth so that India can divide the opportunity among investors, consumers and the farmers.