Day 35 – Q 4.What are the upstream challenges faced by the cooperative model of food processing industries? Discuss. How can those be addressed? Suggest.

4. What are the upstream challenges faced by the cooperative model of food processing industries? Discuss. How can those be addressed? Suggest. 

खाद्य प्रसंस्करण उद्योगों के सहकारी मॉडल को किन अपस्ट्रीम चुनौतियों का सामना करना पड़ रहा है? चर्चा करें। उनको कैसे हल किया जा सकता है? सुझाव दें।

Introduction:

Food Processing includes process under which any raw product of agriculture, dairy, animal husbandry, meat, poultry or fishing is transformed through a process in such a way that its original physical properties undergo a change and the transformed product has commercial value and is suitable for human and animal consumption. It also includes the process of value addition to produce products through methods such as preservation, addition of food additives, drying etc. with a view to preserve food substances in an effective manner, enhance their shelf life and quality.

Body

Upstream challenges faced by the cooperative model of food processing industries.

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:

• Low availability 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 fertilisers, 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.
• 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
• 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
• 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
• 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

Suggestions to further boost the sector

India cannot afford any wastage of food, 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.

• There is a need for an integrated approach with a focus on forging backward and forward linkages, which are crucial for scaling up the economic viability of the sector.
• The regulatory framework for contract and corporate farming needs to be developed in this regard. Model land leasing law developed by NITI Aayog is a step in the right direction that needs to be implemented by states with suitable local adaptations and modifications.
• Promote the holistic development of the sector by increasing private sector participation with a well-developed framework for risk-sharing and fiscal incentives for creating infrastructure for logistics, storage, and processing.
• There is a need for modification in the Mega food park scheme for first-time entrepreneurs as the current cap of ten crores credit is not sufficient and has to be enhanced for the high-cost adoption of technology and enhancement of scale.
• The implementation architecture needs to be simplified for a complete overhaul of certifying and approval procedures. There is a crying need to get a single window scheme for the same.
• Ensure uniform implementation of the APMC act to increase private sector participation and also harmonization of tax structure under GST to reduce vast fluctuations in price.
• There is also an urgent need to improve research and development (R&D) standards. This will meet stringent global standards and increase the scope for exports. The globalisation has increased trade across the borders and about 460 million tons of food valued at US$ 3 billion is traded annually. Hence, India has immense potential for global trade in agricultural and processed food products. The share of food processing exports in total exports was about 12% during the last few years. Between 2011 and 2015, India s exports of processed food products have been growing at a compounded annual growth rate (CAGR) of 23.3%. These figures reinforce the fact that India can capitalise on the export potential of the food processing sector in the forthcoming years.
• There is also a need to encourage academia and industry to commence courses in food packing, processing, biotechnology, information technology so that there would be a constant supply of skilled manpower and also help India achieve global excellence in the food processing sector.

Way Forward

• Food processing has numerous advantages which are specific to Indian context. It has capacity to lift millions out of poverty and malnutrition. Government should develop industry in a way keeping in mind the interests of small scale industry along with attracting big ticket domestic and foreign investments.
• The entire food value chain in India is controlled by multiple ministries, departments and laws. A comprehensive policy will ensure that various initiatives across the departments are aligned to the overall goal of ensuring availability, awareness, affordability, access, quality and safety of food.
• The target of ensuring food security for more than a billion people requires a concerted effort by all stakeholders including government and the food processing industry. In addition to private players and government, industry bodies and academia will also have a crucial role in the success of these initiatives.

Conclusion

India is one of the major exporters of processed food products and so the FPI earns significant export revenue for the country. India needs to go for technology up-gradation as well as innovation and diminish the adverse role of intermediaries and strengthen supply chain for the robust growth of this sector. A vibrant FPI sector marked by a supportive ecosystem can alleviate India s concerns on inter-linked issues of food security, malnutrition and food inflation. And this must be a core priority for the government in the larger national interest.