In the new Mains syllabus, UPSC has included: Food processing and related industries in
India
But ^thats not the end. Food processing topic also overlaps with
1.
GS2
GS3
2.
Government policies and interventions for development in various sectors and issues arising
out of their design and implementation.
1.
storage, transport and marketing of agricultural produce and issues and related constraints;
1.
Sci-Tech research e.g. Food irradiation, developing new crop hybrids, animal-breeds etc.
+ same food processing points can be selectively used for discussing ruralunemployment, food inflation, general inflation, FDI in multi-brand retail; even current
account deficit and rupee depreciation: whether its essay / interview or group discussion
(in case of SBI/CAT) hell even RBI Officer phase II descriptive papers.
Structure of the [Food processing] Article series:
1.
We get basic overview of significance-scope-potential-obstacles
2.
Truckload of Government schemes related to post-harvest management, Mega
Food parks etc.
3.
4.
5.
Then we start basic theory of supply chain management (SCM), and upstream
downstream issues of individual food processing sub-sectors viz. Dairy, Fruit and
Veggies, Egg-Meat-Fishes, Confectionary, Wine, Edible oil etc.
References used for this article series
Source
Books
Title
comment
1.
A Manual for
Entrepreneurs: Food
Processing Industry (Tata
McGraw-Hill Publication)
1.
Food
processing:
Opportunities and
Challenges (ICFAI
university press)
1.
IGNOU MBA
booklets (Coursecode:
MS-55)
PDFs
Planning commissions
report on Encouraging
Investments In Supply
Chains and cold storages
Web
plenty of fodder on
supply chain,
opportunities, obstacles
various schemes
Note: All those Food processing related PDFs have been uploaded
onhttps://files.secureserver.net/0sL2N0Ej5XwsWc
12th Five year plan uploaded on https://files.secureserver.net/0sLrYY0FFJRric
Indian food processing industry: Significance
size
12th Five year plan (FYP) wants to create more than 50 million jobs. Out of that,
Food processing sector is to create one million jobs.
Curbing Migration
When food processing plants are setup near agro/rural regions, they reduce:
1.
2.
3.
exploitation of farmers
4.
rural-urban migration
1.
unplanned urbanization,
2.
In the last few years Food inflation has been a major problem. Food inflation is
eventually passed through into manufactured goods through higher money wages.
via:
1.
2.
Indian villagers are away from market= have to grow cereals. (as we learned
in Von Thunen model)
In recent years, Government increased Minimum support prices for rice and
wheat.
On the other hand, weve to rely on imported oilseeds because of higher MSP,
farmers prefer to grow rice/wheat than oilseeds=> higher oilseed import adds to
Current account deficit and leads to 1$=62 rupees=>crude oil expensive=petrol
expensive=everything transported through petrol/diesel gets expensive=thus the cycle
of middle class exploitation is complete.
Coming to the original point: we need crop diversification, all farmers shouldnt
be growing just rice and wheat. But if want to seduce the farmers into growing other
crops, then following must be done
1.
Promote food industry with backward linkages to farmers growing fruits,
vegetables, milk, fish, meat, poultry, grain, etc.
2.
once weve done #1 + #2=> then even the farmers away from market area will see
good income opportunity in growing non-cereal crops => crop diversification => the
excessive rotting-wheat surplus problem is solved.
Some filler significance points: food processing
1. Increases shelf life: milk vs butter
2. Increase value: milk vs butter
Scope/Potential
in production of
rice, wheat, potato, garlic, cashew nut, groundnut, dry onion, green
peas, pumpkin, gourds, cauliflowers, sugarcane, tea
among top
five
With such a huge raw material base, we can easily become leading food supplier in the
world. (But we havent, because of the obstacles discussed later).
Geographical advantages
1.
46 out of 60 soil types are present in India.
2.
More than 26 types of climatic conditions= can cultivate large variety of fruits,
crops, vegetables.
3.
Large coastline, villagers in 13 states engaged in fishing as their secondary
activity.
4.
Variety domestic animals such as cows, buffaloes, goats, chicken, lamb, sheep.
5.
Large irrigated area under cultivation. Ample supply of fresh water for human,
plant and animals.
New Demand
In the upcoming years, there will be good demand for healthy, modern food products
due to following reasons:
1.
Youth population (age group 15 25): doesnt shy away from trying new food
products.
2.
More Nuclear families: usually working couple => less cooking time +
expensive maids=need ready to eat / ready to cook food.
3.
Rising incomes, middle class and rich families=can afford processed food.
4.
5.
Growing migration from rural to urban India + rising income = demand for
bread, butter etc.
6.
Media penetration, advertisements=> demand is created for health-drinks,
noodles, cream-biscuits, cornflakes etc.
7.
Celebrity chefs, cookery channels= new dishes, international cuisines
introduced=>demand for their ingredients, vegetables in India.
8.
food.
turnover USD
2015
>250 billion
2020
>300 billion
Government Initiatives
Many food processing sectors that were earlier reserved for small scale
industries (SSI) have been de-reserved
FDI limits have been relaxed, Excise duties have been reduced, export subsidies
given
and so on (^all these elaborated in later articles.) Together they facilitate the
expansion of food processing industry in India. More scope points, specific to individual
sector (i.e. Dairy, meat, fish etc) later articles.
so far everything sounds hunky dory but if our food processing industry was so
awesome, then UPSC wouldnt have included it in the syllabus. Then, what are the.
Obstacles to food processing?
country
India
barely 6-7
China
>20
USA
>60
Pricing
Since unit production cost is high, he cant sell his products cheap unlike a big MNC, and
Indian consumers are price sensitive.
BrandBuilding
Small players=small profit, seasonal business. In global market they cant establish
themselves as a long-term player they only do opportunistic businesses, undercut each
other.
Low
Technology
Marketing
Cant invest in R&D to develop new products (e.g. chilli chewing gum or tomato
cream biscuit!)
but on the other hand, an Indian Halwai (sweet maker) cant do same level of
marketing in USA to create demand for jalebi or peda.
Un-Export
Quality
Instead small company relies on multiple small supplier hence Raw material=nonuniform in quality.
Then their products are rejected in US/EU market for not meeting the Codex/HACCP
standards. (e.g. mango juice rejected for stone weevil, buffalo meat rejected for food-nmouth disease, fish rejected for heavy metal contamination and so on.)
retailing
Cant do forward linkage e.g opening its own factory retail outlet like Nike, Adidas
or Apple => small company has to rely on third party retailers and need to give them margin
from sales= profit decrease and poor economies of scale continues.
1.
For long, many food processing items were reserved for Small scale industries
only.
2.
High input costs due to multiple taxes, middle men. Profit level is low=cant
expand.
3.
Government schemes, subsidies, grants have low-ceilings =Individual person
cant setup big plants
4.
5.
Bigger the plant, bigger the headache in terms of tax-liabilities. Creative Indian
entrepreneurs rather setup multiple small plants to get subsidies/tax benefits of MSMEindustries, and sell unbranded food products.
Anyways, some more obstacles for Indian food processing industry:
Price Sensitivity
Preference For
Fresh Food
Agri Problems
Supply Chain
Problems
Infrastructure
Finance
Schemes
Laws
The Food Inspectors cause of harassment and bribedemands in terms of pulling up entrepreneurs under the Weights
and Measures Act, ingredient content and mix, labelling norms,
etc.
While the various acts are necessary, court cases turn out
to be expensive for small-entrepreneurs- especially if involved in
inter-state trade.
Market
Information
Manpower
Packaging
20%
Fruit Juice
19%
Jam
12%
Chicken Nuggets
8%
Branded Atta
6%
type
post-harvest % loss
cereal
wheat
pulses
blackgram
oilseed
groundnut
10
fruits
guava
18
veggies
tomato
12
spices
turmeric
marine
inland-fish
But both of them have cold-storage facilities, hence they sell l both dry and wet/fresh
food products
dry
fresh
But in India, kirana stores dont have cold storage facilities=> they only sell dry
food products.
Meat, poultry and marine products are primarily sold in separate markets but
they too dont have cold storage=>wastage.
Thus, lack of organized retail, leads to
1.
2.
3.
poor shopping
experience
1.
1.
1.
Production Managers or
Supervisors
Product Development
Technologists
Food Engineers
Food Microbiologists
Research Technicians
Technical Representatives
Problems
Lack Of Men
youth.
Lack Of Courses
Outdated
Syllabus And
Professors
Inspectors
Engineering
1.
Sarkari Domain
Multinational Food companies typically have an inhouse global network of R&D professionals.
1.
Baba Adams
Mindset
1.
Manpower
Many students prefer alternate careers which are
found to be more fulfilling and remunerative. There has
been a significant drop in the quality of people entering
the R&D field
1.
n
Implementatio
1.
There is a huge opportunity for developing and commercializing desi foods for
export e.g. ethnic beverages such as kokum, coconut water and ethnic food such as
khakra, amla preserve etc. But, to make them appealing to foreign consumers, R&D
required for product development, food-texture, rheology, mouth-feel, smell, color,
packaging etc.
1.
Internationally, following research-developments are ongoing, while we are
generations behind in research:
area
processing
packaging
Transport capacity
India
developed countries
16 tonnes
36 tonnes (USA)
Indian national highways account for only 2% of the total road network but
carry 40% of all cargo.
This puts a high pressure on the highways due to the high traffic volumes =>
delays in transit + damage to perishable products
Though highways are well-spread, theyre yet to connect all 550,000+ villages
in India
Railway is cheaper than road transportation but railways
currently contribute barely ~25% of the total cargo transported
Although India is the second largest producer of food in the world but its share in
worlds exports is very low despite its inherent strength in tea, spices and rice. Why?
expensive
Raw Material
etc.
low
processing
low quality
Branding
transport
Packaging
Dumping
Devaluating
^these are just few of the many problems/obstacles faced by Indian food industry. In
the next article, we see various government schemes related to post-harvest
management, food processing industries and agro-export.
Food processing topic also overlaps with
1.
GS2
GS3
2.
Government policies and interventions for development in various sectors and issues arising
out of their design and implementation.
1.
storage, transport and marketing of agricultural produce and issues and related constraints;
1.
Sci-Tech research e.g. Food irradiation, developing new crop hybrids, animal-breeds etc.
+ same food processing points can be selectively used for discussing ruralunemployment, food inflation, general inflation, FDI in multi-brand retail; even current
account deficit and rupee depreciation: whether its essay / interview or group discussion
(in case of SBI/CAT) hell even RBI Officer phase II descriptive papers.
Structure of the [Food processing] Article series:
1.
We get basic overview of significance-scope-potential-obstacles
2.
Truckload of Government schemes related to post-harvest management, Mega
Food parks etc.
3.
4.
5.
Then we start basic theory of supply chain management (SCM), and upstream
downstream issues of individual food processing sub-sectors viz. Dairy, Fruit and
Veggies, Egg-Meat-Fishes, Confectionary, Wine, Edible oil etc.
References used for this article series
Source
Books
Title
comment
1.
A Manual for
Entrepreneurs: Food
Processing Industry (Tata
McGraw-Hill Publication)
1.
Food
processing:
Opportunities and
Challenges (ICFAI
university press)
1.
IGNOU MBA
booklets (Coursecode:
MS-55)
upstream-downstream requirements
PDFs
Planning commissions
report on Encouraging
Investments In Supply
Chains and cold storages
Web
plenty of fodder on
supply chain,
opportunities, obstacles
various schemes
Note: All those Food processing related PDFs have been uploaded
on https://files.secureserver.net/0sL2N0Ej5XwsWc
12th Five year plan uploaded on https://files.secureserver.net/0sLrYY0FFJRric
Indian food processing industry: Significance
size
12th Five year plan (FYP) wants to create more than 50 million jobs. Out of that,
Food processing sector is to create one million jobs.
Curbing Migration
When food processing plants are setup near agro/rural regions, they reduce:
1.
2.
3.
exploitation of farmers
4.
rural-urban migration
1.
unplanned urbanization,
2.
In the last few years Food inflation has been a major problem. Food inflation is
eventually passed through into manufactured goods through higher money wages.
via:
1.
2.
Indian villagers are away from market= have to grow cereals. (as we learned
in Von Thunen model)
In recent years, Government increased Minimum support prices for rice and
wheat.
On the other hand, weve to rely on imported oilseeds because of higher MSP,
farmers prefer to grow rice/wheat than oilseeds=> higher oilseed import adds to
Current account deficit and leads to 1$=62 rupees=>crude oil expensive=petrol
expensive=everything transported through petrol/diesel gets expensive=thus the cycle
of middle class exploitation is complete.
Coming to the original point: we need crop diversification, all farmers shouldnt
be growing just rice and wheat. But if want to seduce the farmers into growing other
crops, then following must be done
1.
Promote food industry with backward linkages to farmers growing fruits,
vegetables, milk, fish, meat, poultry, grain, etc.
2.
once weve done #1 + #2=> then even the farmers away from market area will see
good income opportunity in growing non-cereal crops => crop diversification => the
excessive rotting-wheat surplus problem is solved.
Some filler significance points: food processing
1. Increases shelf life: milk vs butter
2. Increase value: milk vs butter
moveing to.
Scope/Potential
in production of
rice, wheat, potato, garlic, cashew nut, groundnut, dry onion, green
peas, pumpkin, gourds, cauliflowers, sugarcane, tea
among top
five
With such a huge raw material base, we can easily become leading food supplier in the
world. (But we havent, because of the obstacles discussed later).
Geographical advantages
1.
46 out of 60 soil types are present in India.
2.
More than 26 types of climatic conditions= can cultivate large variety of fruits,
crops, vegetables.
3.
Large coastline, villagers in 13 states engaged in fishing as their secondary
activity.
4.
Variety domestic animals such as cows, buffaloes, goats, chicken, lamb, sheep.
5.
Large irrigated area under cultivation. Ample supply of fresh water for human,
plant and animals.
New Demand
In the upcoming years, there will be good demand for healthy, modern food products
due to following reasons:
1.
Youth population (age group 15 25): doesnt shy away from trying new food
products.
2.
More Nuclear families: usually working couple => less cooking time +
expensive maids=need ready to eat / ready to cook food.
3.
Rising incomes, middle class and rich families=can afford processed food.
4.
5.
Growing migration from rural to urban India + rising income = demand for
bread, butter etc.
6.
Media penetration, advertisements=> demand is created for health-drinks,
noodles, cream-biscuits, cornflakes etc.
7.
Celebrity chefs, cookery channels= new dishes, international cuisines
introduced=>demand for their ingredients, vegetables in India.
8.
food.
turnover USD
2015
>250 billion
2020
>300 billion
Government Initiatives
Many food processing sectors that were earlier reserved for small scale
industries (SSI) have been de-reserved
FDI limits have been relaxed, Excise duties have been reduced, export subsidies
given
and so on (^all these elaborated in later articles.) Together they facilitate the
expansion of food processing industry in India. More scope points, specific to individual
sector (i.e. Dairy, meat, fish etc) later articles.
so far everything sounds hunky dory but if our food processing industry was so
awesome, then UPSC wouldnt have included it in the syllabus. Then, what are the.
Obstacles to food processing?
country
India
barely 6-7
China
>20
USA
>60
Pricing
Since unit production cost is high, he cant sell his products cheap unlike a big MNC, and
Indian consumers are price sensitive.
BrandBuilding
Small players=small profit, seasonal business. In global market they cant establish
themselves as a long-term player they only do opportunistic businesses, undercut each
other.
Low
Technology
Marketing
Cant invest in R&D to develop new products (e.g. chilli chewing gum or tomato
cream biscuit!)
but on the other hand, an Indian Halwai (sweet maker) cant do same level of
marketing in USA to create demand for jalebi or peda.
Instead small company relies on multiple small supplier hence Raw material=nonuniform in quality.
Then their products are rejected in US/EU market for not meeting the Codex/HAC
standards. (e.g. mango juice rejected for stone weevil, buffalo meat rejected for food-nmouth disease, fish rejected for heavy metal contamination and so on.)
retailing
Cant do forward linkage e.g opening its own factory retail outlet like Nike, Adid
or Apple => small company has to rely on third party retailers and need to give them mar
from sales= profit decrease and poor economies of scale continues.
1.
For long, many food processing items were reserved for Small scale industries
only.
2.
High input costs due to multiple taxes, middle men. Profit level is low=cant
expand.
3.
Government schemes, subsidies, grants have low-ceilings =Individual person
cant setup big plants
4.
5.
Bigger the plant, bigger the headache in terms of tax-liabilities. Creative Indian
entrepreneurs rather setup multiple small plants to get subsidies/tax benefits of MSMEindustries, and sell unbranded food products.
Anyways, some more obstacles for Indian food processing industry:
Price Sensitivity
Preference For
Fresh Food
Agri Problems
Supply Chain
Problems
Infrastructure
Finance
Schemes
Laws
The Food Inspectors cause of harassment and bribedemands in terms of pulling up entrepreneurs under the Weights
and Measures Act, ingredient content and mix, labelling norms,
etc.
While the various acts are necessary, court cases turn out
to be expensive for small-entrepreneurs- especially if involved in
inter-state trade.
Market
Information
Manpower
Packaging
20%
Fruit Juice
19%
Jam
12%
Chicken Nuggets
8%
Branded Atta
6%
type
post-harvest % loss
cereal
wheat
pulses
blackgram
oilseed
groundnut
10
fruits
guava
18
veggies
tomato
12
spices
turmeric
marine
inland-fish
But both of them have cold-storage facilities, hence they sell l both dry and wet/fresh
food products
dry
fresh
But in India, kirana stores dont have cold storage facilities=> they only sell dry
food products.
Meat, poultry and marine products are primarily sold in separate markets but
they too dont have cold storage=>wastage.
Thus, lack of organized retail, leads to
1.
2.
3.
poor shopping
experience
1.
1.
1.
Production Managers or
Supervisors
Product Development
Technologists
Food Engineers
Food Microbiologists
Research Technicians
Technical Representatives
Problems
Lack Of Men
youth.
Lack Of Courses
Outdated
Syllabus And
Professors
Inspectors
Engineering
1.
Sarkari Domain
Multinational Food companies typically have an inhouse global network of R&D professionals.
1.
Baba Adams
Mindset
1.
Manpower
Many students prefer alternate careers which are
found to be more fulfilling and remunerative. There has
been a significant drop in the quality of people entering
the R&D field
1.
n
Implementatio
1.
There is a huge opportunity for developing and commercializing desi foods for
export e.g. ethnic beverages such as kokum, coconut water and ethnic food such as
khakra, amla preserve etc. But, to make them appealing to foreign consumers, R&D
required for product development, food-texture, rheology, mouth-feel, smell, color,
packaging etc.
1.
Internationally, following research-developments are ongoing, while we are
generations behind in research:
area
processing
packaging
Transport capacity
India
developed countries
16 tonnes
36 tonnes (USA)
Indian national highways account for only 2% of the total road network but
carry 40% of all cargo.
This puts a high pressure on the highways due to the high traffic volumes =>
delays in transit + damage to perishable products
Though highways are well-spread, theyre yet to connect all 550,000+ villages
in India
Railway is cheaper than road transportation but railways
currently contribute barely ~25% of the total cargo transported
Although India is the second largest producer of food in the world but its share in
worlds exports is very low despite its inherent strength in tea, spices and rice. Why?
expensive
Raw Material
etc.
low
processing
low quality
Branding
transport
Packaging
Dumping
Devaluating
^these are just few of the many problems/obstacles faced by Indian food industry. In
the next article, we see various government schemes related to post-harvest
management, food processing industries and agro-export.
Problems with government schemes
1.
Agriculture is a State subject. No scheme can be successful without coherence
between the Centre and States in policies and strategies. But we have plethora of bodies
and departments @center and state level=empires within empires. Even Left hand
doesnt know what right hand is doing. Problem is compounded when ruling parties are
different at state and center level.
2.
Most schemes have Low ceiling (they just give a few lakh rupees) + as plant
size increases, the MSME tax benefits decrease. So, food-entrepreneur setups two small
plants using money two schemes, rather than one big plant. Smaller the plant=>poor
economies of scale=>high production cost, cant invest in marketing-research,
innovation, export quality products.
3.
These Subsidies/grants are back-ended (meaning ca$H is not given before
you start the project, but only after the project is completed or in final stage)
4.
But Parameters of project approval/ file-Processing= non-transparent (just like
our UPSC). Timely clearance of project files=nope. Sometimes they dont even give
reasons for rejecting project. Food-Entrepreneur is unsure whether bureaucrats will
approve his file or not (+bribe demand)
5.
Significant time lags from the date of application for financial assistance, to
release of funds= affects the project schedule= cost overruns for the investor.
6.
Most schemes seek to get investors to pump money in certain infrastructure
without providing the necessary support for the utilization of the infrastructure. (e.g.
asking pvt player to setup cold storage, without guaranteeing continuous electricity
supply).
7.
Overenthusiasm =Excess capacity. Example: many tax-benefits given to
groundnut oil refining industry=new units keep popping up even when groundnut
cultivation is not sufficient to provide raw material to all refineries. Result: No unit runs
on full capacity, industrial sickness, loan defaults, NPA.
8.
Inputs of Panchayati raj institution, cottage industries, local entrepreneurs are
considered irrelevant in scheme design.
9.
Lack of focus/financing for freezer cabinets in retail outlets/kirana stores,
vending machines for tea/coffee/beverages.
10.
Working capital requirements are high for food processing industry (thanks so
many intermediaries, electricity, high duties on imported chemicals etc.) But these
schemes only give money for initial project/machines. Dont provide support for working
capital (i.e. cost of day to day operations, buying raw material, electricity-utility bills
etc.)
Solution: Integrate all schemes offered by various Ministries and allied agencies.
After years of stupidity and badass thuggary, finally they woke up during 12th Five year
plan drafting. Now theyre converging various schemes of Horticulture board, Agriculture
ministry, Food processing ministry and Commerce ministry under the National Mission
on food processing. ok, better late than never but even small time players like Thailand
and Vietnam have reformed before we did. So theyre already ahead in the race of
capturing export market. Anyways, lets check various plans, missions, schemes.
12th FYP: food processing
Starting with some (stupid) numbers:
work
Horticulture development
food processing
more than 15000 cr. (in 11th FYP this was barely
4000 crores)
1.
Setup 120 integrated cold chain projects, of which 20 projects
would be of irradiation facilities.
1.
Existing infrastructure development schemes Mega Food
Parks Scheme, Integrated Cold Chain Scheme= Expand and modify
them.
Finance
1.
Fancy
Things
a.
National Institute of Food
Technology Entrepreneurship and Management (NIFTEM),
b.
Export
1.
Side note: The new Mains syllabus contains Ministries and Departments of the
Government so, in that context, while were doing the food processing, better prepare
this ministrys functions as well:
Functions of MoFPI
1.
2.
R&D in food processing, Specialized packaging for food processing industries,
Technical assistance and advice to food processing industry
3.
4.
5.
o
Bread, oilseeds, meals (edible), breakfast foods, biscuits, confectionery,
other ready to eat food products
o
foods
6.
Alcoholic drinks, beer, Aerated waters / soft drinks and other processed
strengthen institutions such as
o
National Institute for Food Technology and Entrepreneurship
Management (NIFTEM)
o
MoFPI is responsible to 2 fancy missions +3 (bogus) schemes & given ~700 crores in
2013s budget.
2 fancy missions
3 schemes
1.
1.
Vision 2015 for food
processing
2.
modernization of abattoirs
(slaughterhouses)
2.
National Mision on food
processing
3.
What?
targets by 2015
20%
35
3%
investment
This vision2015 document was prepared by Rabo India Finance ltd. It talks about
individual sectors (dairy, meat, tea, coffee etc.) Well see those points later during
articles on individual sector.
National Mission on Food Processing (NMFP)
state
North East
90
10
75
25
Will do following:
1.
2.
3.
Help state governments to create synergy between their agricultural plans vs.
food processing sector.
4.
5.
6.
Skill development, training and entrepreneurship for both post-harvest
management and food processing industry.
7.
Give capital/technology/skill to MSMEs so they can setup/modernize food
processing units
8.
Help food processing industry to meet quality /food safety standards for both
desi and foreign markets.
This national food processing mission has following schemes:
1.
Technology Up-gradation / Setting up / Modernization / Expansion of Food
Processing Industries
2.
cold chain facilities for Non-Horticultural produces and Reefer Vehicles
3.
4.
Modernization of Abattoirs
5.
6.
7.
Promotional Activities
8.
function
Industry associations
^this is ~200 words. From UPSC point of view, the Aukaat of NMFP is not beyond 15
marks questions on salient features. Hence not covering any further. Moving to the
three schemes
#1: Mega Food Parks:
Mega food parks will be setup in 12th Five year plan. Government allotted more than
1700 crores for it.
First, a Special Purpose Vehicle (SPV) will be created to setup the Mega Food
Park.
So, What is this special purpose vehicle, does it look like Tata Sumo or Tata
safari? Long thing cut short: youre aware of debt vs equity. SPV = a limited company
setup with money from farmers associations, private players, financial institutions, state
level agencies etc. (meaning theyre are equity holders)
Then Government will give them grant to cover **% of project cost. Thus Food
Park is setup and everyone benefits.
Financial assistance for mega Food Park:
Area
General
50
75
Core Infrastructure
Facilities
training centres,
trade centre/display centres, marketing support
system etc
irradiation facilities
Basic Infrastructure
Services
road-road connectivity
electricity, telecom-internet
parking bays
DPRs,
Mega food parks are based on the hub and spoke model. So what is this Hub and
Spoke model?
Imagine a bicycle wheel: it has a strong central hub with a series of connecting spokes.
Thus we have
Three Tiers:
What?
SHG
Field collection
Center
Primary
Processing
Center (PPC)
^ Similar concept for eggs and milk. click the following diagram and concept will become
clear:
Here, each tier is viable, independent and linked with higher players in the
market.
Central
Processing
Center (CPC)
Primary
Processing
Centers
(PPC)
Location
Advantages
1.
Nuzvid,
2.
Tirupati,
3.
Madanapalle
4.
Mogilli
1.
Chittoor already an
Agro-export processing zone,
leading producer of mangoes.
2.
only 120 kms from
Tirupati, a pilgrim center with
1.
Purnea
2.
Katihar
3.
Khagaria
4.
Samastipur
5.
Banka
1.
This region is second most
productive zone in Bihar in terms of
total production of fruit and
vegetables
2.
Sidenotes
4.
equi-distant from two
major metros in India, a major
port (Chennai) and two
international airports (Chennai
and Bengaluru) and one
domestic airport (Tirupati)
3.
It is also the gateway to
Northeast for goods transportation,
being a zone heavy surface traffic
movement.
rural-urban migration,
unplanned urbanization,
4.
5.
6.
will provide efficient supply chain management from farm gate to retail outlet.
7.
8.
farmers can utilize the Cold Storages, Ripening Chambers, and Ware houses =
less wastage, no distress sales
9.
10.
Food entrepreneur can establish backward linkages (with farmers) and forward
linkage (with retailers) = compact supply chain=more profits.
#2: Cold Chain infra
Full name of scheme: Establishment of Cold Chain, Value addition and
Preservation Infrastructure
Looks like FoodPRO ministry doesnt have any intelligent babu to comeup with a fancy
name/abbreviation for this scheme. Atleast they could have named it after you know
who. But alas $harad Pawar is the b0$$ of Foodpro ministry, perhaps thats why
schemes are not allowed to be named after you know who.
Anyways what does this cold storage scheme do?
Helps creating integrated cold chain and preservation infrastructure facilities without any
break from farm to consumer. Under this scheme, following facilities created:
1.
Minimal processing centre at the farm gate level having facilities like weighing,
sorting, grading, pre-cooling, cold storage and normal storage facilities;
2.
Mobile pre- cooling vans and reefer trucks;
3.
Distribution hubs having facilities such as multi-purpose cold stores, variable
humidity stores, blast freezing etc.
4.
Financial assistance
Area
General
50
75
build-own-operate (BOO)
build-operate-transfer (BOT)
3.
Features:
1.
2.
3.
4.
5.
6.
Financial assistance
area
General
50
75
development plan
Maximum grant: Rs.15 crore per project.
Ten slaughterhouse projects ongoing:
1.
Dimapur (Nagaland)
2.
3.
Ranchi (Jharkhand)
4.
5.
Hyderabad (Andhra
Pradesh)
1.
Patna (Bihar)
1.
Ahmednagar (Maharashtra)
1.
1.
1.
Shillong ( Meghalaya)
So, these three were the main schemes of Food processing ministry.
1.
2.
3.
slaughterhouse modernization.
Now lets look @some chillar schemes of this MoFPI (Ministry of food processing
industries)
MoFPI: Misc. Schemes
North
East
HRD
1.
National Institute of Food Technology Entrepreneurship &
Management (NIFTEM) at Kundli, Sonepat, Haryana
2.
Indian Institute of Crop Processing Technology (IICPT) at
Thanjavur, Tamil Nadu
#2 Grant to Other universities
1.
all recognized universities- public / private can get funding upto 75
lakhs for starting food processing related courses, buying books, ejournals, magazines, teaching infrastructure etc.
2.
funding is given for training centers, entrepreneurship
development program for food processing.
Quality
testing
labs
Encourage mechanical harvesting, cleaning and drying at farm and market level
4.
5.
6.
7.
a.
building storage capacities in which grains procured by Government
agencies would be stored on payment of storage charge
b.
create infrastructure for the integrated bulk handling, storage and
transportation of foodgrains
PEG scheme
In recent times, Government has increased the Minimum Support Price (MSP)
for wheat and rice. Result? high procurement but FCIs storage capacity =limited=rotten
grains.
Government
FCI
meaning FCI will hire that private godown to store publicprocured food grain and pay for service
FCI reforms
4.
The principle of First in First Out (FIFO) to avoid longer storage of foodgrains
in godowns.
5.
a.
b.
Provides funding for various activities (R&D, nurseries etc) including funds for
post-harvest management, supply chain infrastructure, cold storages.
Terminal market complexes (TMC)
2.
(TN)
1.
1.
Sambalpur (Odisha)
Commercial
Horti
but In short, they give subsidy for setting pack house, precooling unit, cold storage, controlled atmosphere (CA) storage, refer
transport, ripening chambers etc.
Tech Dvlp
market
information
3.
4.
Technology Awareness
5.
Organising/participation in seminars/symposia/exhibitions
6.
7.
8.
9.
10.
4.
2.
3.
Review the present situation of horticulture development in
particular area/ State
4.
Identify constraints in horticulture development and
suggest remedial measures
Horticulture
Promotion
Service
5.
Develop short term and long term strategies for systematic
development of horticulture,
6.
Develop primary/secondary data of various aspects on
horticulture
7.
Provide consultancy services, expert services & establishing
labs etc
8.
Conduct technical scrutiny and certification of cold chain
infrastructure
9.
Preparing reports relating to export competitiveness in the
area of fresh horticulture produce
National Centre for Cold Chain Development (NCCD)
3.
Financial assistance upto 90% to State Governments to
setup/modernize/expand cold storages and ice plants via cooperatives.
4.
establish standards and protocols related to cold chain testing, verification,
certification and accreditation as per international standards
5.
Provide technical assistance to Financial Institutions, Government Departments/
agencies, and industry for selecting cold chain component e.g. refrigeration units,
refrigerated transport equipment, display cabinets, milk tanker etc.
6.
6.
7.
To create general awareness and provide education and training to farmers,
entrepreneurs and market functionaries.
Agmarknet
Prices
Movement
Farmers
Advisory
Weather
Commodity
Exchange
Research
install Bulk Milk Coolers at village level close to the area of milk production
for installation of bulk milk cooler
Dairy Entrepreneurship
Development Scheme (DEDS)
^These states collectively account for over 90% of countrys milk production.
Funding pattern
ca$h comes
from
1.
Bank
2.
Central government (Department of Animal Husbandry,
Dairying and Fisheries)
to
ultimately to
State Government
4.
5.
The investment made by central and state government have not materialized
into real-useful assets on the ground.
6.
Indiscreet proliferation of AEZs in certain states. WB, Maharashtra have multiple
Agro export zones while Odisha barely got one AEZ and that too in 2013= More than a
decade after the scheme was launched in 2001!
Export credit schemes
1.
Focus Product
Scheme (FPS)
1.
Focus Market
Scheme (FMS)
1.
Market Linked
Focus Product Scheme
(MLFPS)
1.
Vishesh Krishi
1.
And Gram
Udyog Yojana
4.
5.
You exported xyz worth Rs.100 then Director General of Foreign trade will give
you a scrip (piece of paper) worth Rs. 2 to 5 (or whatever % credit is decided in the
scheme)
When you import capital goods, youve to pay custom duty. But you can use
these credit scrip to pay for that custom duty.
Another doubt: Why does or why should government give duty credit?
Ans. Because other (stupid) schemes have failed to improve the rural infrastructure,
hence it is difficult to transport/market these products from India to abroad. Therefore
duty credit is given to offset infrastructure inefficiencies and other associated costs
involved in marketing of these products.
Misc. Bodies
List is not exhaustive (and that is the criticism: too many bodies=lack of coordination.)
Export related
APEDA
bears the cost for doing analysis of peanuts, grapes for meeting
HACCP/Codex standards.
Government
Coffe
e Board
Spice
s Board
Tea
Board
R&D, HRD
Nddb
Meat +
Poultry
Statutory body
Indian Council of Agricultural Research (ICAR) is an
autonomous organisation under the Department of Agricultural
Research and Education (DARE), Ministry of Agriculture, Government
of India.
ICAR
Crop
processing
etc.
NIFTEM
Deemed to be University
Nutrition
Horticulture
research
prelims
fodder point that Meat processing industry was delicensed in the 90s and as a result, now India is
6th largest exporter of bovine meat, produces meat
worth >Rs.60,000 crores.
After this, only one and last article remains in [Food processing]: tea, coffee, wine,
edible oil and confectionary.
Poultry: Scope/significance
Poultry business has potential to grow because:
1.
There is no religious sentiment associated with poultry.(unlike beef or pork)
2.
It takes far less feed to produce a kilo of chicken than the equivalent amount of
pork or beef.
3.
Many youngsters becoming non-vegetarian under the influence of
advertisements e.g. KFC, McDonalds etc.
4.
Consumer studies from other countries say when vegetarians choose to
convert to non-vegetarianism, they first experiment with poultry before trying other
meat products.
5.
Increasing prosperity in emerging markets= people can afford to put more
meat on the table.
Contribution to economy:
1.
2.
3.
Backyard poultry provides cheap protein nutrition and side income to poor
families.
4.
REGION
SOUTH
Characteristic
NORTH
EAST
No concentration of production.
No full integrators.
No concentration of production
WEST
Poultry Supply chain & Backward Integration
click to enlarge
Big poultry companies have backward integration. Lets observe the case study of
Saguna Foods
UPSTREAM
1.
E
MEDICIN
1.
FEED
1.
G
TRAININ
As a result of 1+2+3, all chicken/eggs are uniform in size, shape and quality.
PROCESSIN
Another big player with similar backward integration is Venkys (Pune based
company): supplies Chicken to Indian outlets of McDonalds, KFC, Pizza Hut, and
Dominos.
But just two Cinderella stories doesnt mean everything is well and good with
Indian Poultry business. Lets observe the constrainsPoultry@Upstream
Maize (Poultry-Feed)
Maize consumption by the animal feed sector (which accounts for almost 50%
of maize consumption) has been growing much faster than maize production.
Government offers better MSP for rice and wheat. Hence farmers prefer
rice/wheat over Maize cultivation.
Adding insult to the injury: Indian exports of maize to Bangladesh, Nepal and
other countries have been rising exponentially. These countries do not have significant
domestic maize production, yet their poultry industry is growing rapidly. (Meaning,
Bangleshi and Nepali are using Indian maize to improve their poultry business, while
Indian poultry farmers are struggling.)
Since many poor families raise poultry in backyard dont maintain hygiene
standards=flu outbreak.
This not only hurts the family but also commercial players, because foreign
countries will impose ban on import of Indian egg/chicken because of the bird flu news.
Influenza virus has two components
Haemagglutinin
(H)
Neuraminidase
(N)
There are multiple varieties of (H) and (N), and based on their combination in
the given virus, scientists name it H5N1, H5N2 etc.
Avian flu
Swine Flu
Bird
Pigs
H5N1
h2N1
HPAI
Species affected
Migratory water
fowl
Poultry flocks
(chickens, ducks,
turkeys, geese)
Cats, tigers,
leopards
Human
Disease can also affect humans but only after eating poultry
meat that has not been cooked properly or after very close
contact between a person and an affected animal.first
outbreak: Hongkong97
1.
The Action Plan to combat Avian Influenza was revised in 2012 and circulated to
the State/UT Governments for implementation.
2.
About 90% veterinary workforce of India has been trained to combat bird flu.
3.
4.
5.
6.
7.
All the state governments have been alerted to be vigilant about the outbreak
of the disease.
8.
Government has banned imports of poultry from bird flu positive countries. (and
Oman banned our poultry exports, so tit for tat, the circle of karma is complete.)
9.
Government has alerted Border check posts with neighboring countries to stop
transport of live-birds/eggs/chicken.
Contract Farming
Contract Farming prevalent in Southern India for poultry business. eg. Saguna
Foods and Venkys.
Farmers provided with feed, medicines and bird growing fee. Some companies
have state of the art processing plants located close to cities.
But this contract farming model has still under developed in the remaining parts
of India.
@Processing
Poultry processing capacity India ~ 25,000 birds per hour BUT, Average
utilization is barely 30%. Because Several of the operating units are run by small and
unorganized players.
The only big players in Indian Chicken business= Venkys, Godrej, Arambagh
and Suguna.
@Downstream
Poultry Hygiene
At Retail level, chicken are slaughtered on street side shops/hotels by untrained
people. Result?
1.
Clean water not used for washing= contamination
2.
Poor hygiene practices in defeathering, chopping, removal of viscera etc.
=contamination.
3.
4.
Lengthy farm-to-slaughter time + no cold storage= dehydration= shriveled/bad
quality meat.
5.
Improper ventilation and space for storing live chicken = droppings / feed /
feathers spread bacteria.
Slaughter waste generated per day in Mumbai alone is about 150 tons.
Solution= ban street side slaughter of all animals + rigorous food inspection of all such
shops, just like in developed countries.
Taxation and Smuggling
On the other hand Tamilnadu has exempted Meat, fish eggs, poultry and
livestock from VAT.
OCT
12
WHO confirms bird flu outbreak in government-run turkey farm at Hesaraghatta, Karnataka,
NOV
12
Oman, the biggest egg export market for India, bans import of eggs and chicken from India becaus
bird flu news.
JUN
13
Oman has lifted the ban on importing poultry products from India, but with condition that an Indian
company must get its premises and husbandry procedures verified by Omani officials first.But in du
this ban time, the Omani hotels, businessmen made import-contracts with Brazil and Holland for
supply of eggs and chicken. So, even after the ban is lifted, we are not seeing much high demand f
Oman.
Demand
High cost of feed, high food inflation, ban by Oman= Poultry business is deeply affected,
Most poultry farmers are selling below production cost and making losses.
Govt. schemes for poultry
#1: Poultry Development Scheme
1.
Assistance to
State Poultry Farms
1.
Rural
Backyard Poultry
Development
1.
Poultry
Estates
To setup poultry breeding farms, feed godown, feed mill, marketing of poultry
products, egg grading, packing and storage houses for export, egg and broiler carts for
sale of poultry products etc.
REGION
org. located @
NORTH
Chandigarh
EAST
Bhubaneswar
WEST
Mumbai
SOUTH
Bangalore
SOUTH
NORTH, WEST
Japanese Quail
EAST
Guinea Fowl
They train farmers, women beneficiaries, various public and private sector poultry
organizations, NGOs, Cooperatives and foreign trainees etc.
National Livestock Mission (NLM)
Athulya chick
Kalamasi Fowls
In
Livestock
Goats
Sheep
SHEEP
CHICKEN
4.
No licensing/registration of merchants, brokers or suppliers= non-transparent
pricing, margins/commissions almost 30% of the consumer prices.
#2: Buffalo Slaughter Policy
But in India, buffalo slaughter is allowed only when the buffalo outlives their
useful life as a dairy or a draught animal.
Result:
1.
Male buffalo calves often slaughtered illegally (=revenue loss for government)
2.
Theyre starved when farmers do not find them useful for draught purpose.
(=resource loss, animal cruelty)
3.
Meat processing companies find it difficult to do contract farming for
buffalo/sheep etc. Hind Agro is the only Indian player which has backward linkages with
male buffalo calf rearing.
4.
No control over animal feed =meat quality is not uniform = doesnt commend
high prices abroad.
5.
Meat yield
yields.
Disease
fodder
Municipal slaughter houses are owned and operated by local and state
governments.
Their infrastructure + facilities are (as you can guess) inadequate and outdated.
They charge fees but often money is not used for upgrading the infra/facility.
The animals are often kept in poor conditions (due to lack of adequate
infrastructure)=unhygienic meat.
#2: PRIVATE SLAUGHTER HOUSES
Since many of the slaughterhouses are unorganized and illegal- the byproducts
of livestock slaughter are not utilized for additional income e.g. Meat-cum-Bone Meal
(MBM), tallow, Bone Chips etc. could be sold as pet food. Viscera, waste could used for
methane generation etc.
Since 9th Five year plan, Central government had come up with a scheme to upgrade
municipal slaughter houses, but progress is unsatisfactory. Why?
Under this scheme, center: state will share cost burden equally (50:50) but state
governments are reluctant to pay their 50% money, because of following reasons
1.
Frequent interference by animal rights activists
2.
Negative perception of meat eating and therefore limited proactive action by all
concerned authorities.
Solution: Privatize the Municipal slaughter houses.
Notable private players in Meat industry
COMPANY
BRAND
PRODUCT
Hind Agro
Industries Ltd
Premier, Saffa
Al Kabeer
Al Kabeer
PRICE
TAXATION
SELF-BAN
REGIONAL
PREFERENCE
FRESH
Indian consumers prefer to buy freshly cut meat from the wet
market, rather than processed or frozen meats. Health concerns
associated with red meats leading to preference for poultry.
Meat Export
Till now, China did not allow import of Indian meat because of concerns about
Rinderpest and foot & mouth disease.
But in May 2013, India-China made agreement thatll help in export of buffalo
meat, fishery products and poultry feeds from India to China.
Decline of competitors
Indian buffalo meat exports =potential to grow, because some of our competitors are on
decline:
COMPETITOR
WHY DECLINING?
AUSTRALIA
USA
state
Bonpala sheep
Sikkim
West Bengal
Yak
Kachchhi camel
Gujarat
Chegu goat
Himachal
Nilgiri sheep
Tamil Nadu
Muzzafarnagari sheep
Uttar Pradesh
Berari Goat
Maharashtra
Abattoir modernization
build-own-operate (BOO)
build-operate-transfer (BOT)
3.
Features:
1.
2.
3.
4.
5.
6.
Financial assistance
Area
General
50
75
Dimapur (Nagaland)
2.
3.
Ranchi (Jharkhand)
4.
5.
Hyderabad (Andhra
Pradesh)
1.
Patna (Bihar)
1.
Ahmednagar (Maharashtra)
1.
2.
3.
Shillong ( Meghalaya)
National Control
Programme of Peste
des Petits
goats.
National Control
Programme on
Brucellosis
also provide direct part employment and indirect employment to people in feed,
fodder, meat leather and various input services.
#2: Slaughterhouses @small towns
This way, the loss in the meat sector due to transportation of live animals,
shrinkage of meat and environmental pollution in the cities will be prevented
fresh hides and skins in the tanneries in vicinity of the slaughterhouses will
boost production of quality leather.
rabbits
Livestock
Insurance
Animal Quarantine
and Certification
Service
Pig Development
Veterinary Council of
India
National Institute of
Animal Health
Central/Regional Disease
Diagnostic Laboratories
MCQS
1.
a.
b.
c.
d.
None of above
2.
a.
b.
c.
influenza.
d.
None of Above
3.
a.
b.
NABARD
c.
d.
4.
a.
Rinder pest
b.
Brucellosis
c.
d.
5.
a.
b.
c.
d.
None of above
Descriptive
1.
2 marks
Veterinary Council of India
2.
Livestock Insurance
3.
Livestock Census
4.
5.
15 marks
1.
Discuss the negative impact of Avian influenza on Indian poultry
business. Enumerate the steps taken by Indian government to combat this disease.
2.
Discuss the Upstream issues affecting Indian poultry business and
suggest remedies.
3.
Lack of backward integration in the buffalo meat supply chain, has
hampered the growth of meat processing industry in India. comment
4.
List the initiates taken by Department of Animal Husbandry, Dairying &
Fisheries for promotion of meat and poultry industry.
5.
Innovations that are guided by smallholder farmers, adapted to local
circumstances, and sustainable for the economy and environment will be necessary to
ensure food security in the future. Comment
6.
Factory farming is one of the biggest contributors to the most serious
environmental problems. comment
Essay
1.
higher.
2.
3.
Man is the only animal for whom his own existence is a problem which
he has to solve.
4.