Indian processed food industry 5th in terms of export, expected growth
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Vinu Shankar
January 31 , 2015
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The processed food industry is one of the largest in India. It is ranked
fifth in terms of export, expected growth, production and consumption.
As a matter of fact, increasing incomes are accompanied by changes to
our food habits.
Fuelled by large disposable incomes, a marked
change is seen in the food consumption patterns. A significant part of
this consumptional change is enhanced by the processed food market,
which accounts for at least 30 per cent of the food market.
Industry
sources claimed that the food processing industry would attract
investments to the tune of $33 billion spread over ten years and get
employment for a massive group of the currently employable group.
The
government, on its part, has formulated and implemented several plans
and schemes to provide financial assistance, initially to set up food
processing units and later to modernise as well. There is excellent
support with regard to infrastructure, research and human resource
development, in addition to other promotional aspects, to encourage the
food processing industry.
The processed food industry can be broadly classified as:
- Grain processing;
- Fruit, vegetable and dairy processing;
- Fisheries;
- Meat and poultry processing, and
- Packaged food
Grain processing It
refers to the processing of grains and grain flours that have been
significantly modified from their natural composition. The modification
process generally involves the mechanical removal of bran and germ,
either through grinding or selective sifting.
However, in case
of some grains, the removal of fibre, coupled with fine grinding,
results in a slightly higher availability of grain energy for use by the
body.
Primary milling of grains is the most important activity
in the grain processing segment of the industry. However, primary
milling adds little to shelf life, wastage control and value addition.
Around
65 per cent of the rice produced is milled, mostly in modern rice
mills. However, the sheller-cum-huller mills in operation give low
recovery.
Wheat is processed for flour, refined wheat flour,
semolina and grits. Dal milling is the third-largest segment in the
grain processing industry, and has approximately 11,000 mechanised mills
in the organised segment.
Indian rice, especially basmati rice, has gained international recognition, and is a premium export product.
Branded grains and grain processing are now gaining popularity.
Fruit, vegetable and dairy processing The
fruit and vegetable processing industry is highly decentralised, and a
large number of units are in the cottage or household and small-scale
sector, having small capacities of up to 250 tonnes per annum.
Since
2000, such segments as ready-to-serve beverages, fruit juices and
pulps, dehydrated and frozen fruits and vegetable products, pickles,
processed mushrooms and curried vegetables have shown significant
growth, and units engaged in these are largely export-oriented.
A significant thrust can be given to this sector by strengthening the linkages between farmers and processors.
The
weak linkage between farmers and markets, as well as, farmers and
processing companies has brought about inefficiencies in the supply
chain and encouraged the involvement of middlemen.
The
government of India’s National Agriculture Policy envisages the
participation of the private sector through contract farming and land
leasing arrangements, which not only assures supply of raw material for
processing units, but also a market for agriculture produce, accelerate
technology transfer and capital inflow into the agriculture sector.
The
domestic industry is yet to change its preference in favour of
processed foods. The consumption of value-added fruits and vegetables is
low compared to the primary processed foods and fresh fruit and
vegetables. The inclination towards processed foods is mostly visible in
urban centres.
India has one of the highest livestock
populations in the world, accounting for about 50 per cent of its
buffalo and 20 per cent of its cattle population, most of which are
milch cows and milch buffalo.
India’s dairy industry is
considered as one of the most successful development programmes in the
post-Independence era. Dairy cooperatives account for the major share of
the processed liquid milk marketed in India.
Milk is processed
and marketed by 170 milk producers’ cooperative unions, which federate
into 15 state cooperative milk marketing federations.
Over the
years, several brands have been created by cooperatives like the Gujarat
Cooperative milk Marketing Federation (GCMMF), which markets its
products as Amul; Vijaya (Andhra Pradesh); Verka (Punjab); Saras
(Rajasthan); Nandini (Karnataka), Milma (Kerala) and Gokul (Kolhapur,
Maharashtra).
Fisheries India is the second-largest
producer of fish in the world, contributing to 5.43 per cent of the
global fish production. India is also a major producer of fish through
aquaculture. It ranks second in the world after China.
The total
fish production during 2010-11 is at 8.42 million metric, tonnes with a
contribution of 5.20 million metric tonnes from the inland sector and
3.22 million metric tonnes from the marine sector respectively.
The processing of marine produce into canned and frozen forms is carried out almost entirely for the export market.
The
infrastructure facilities for processing of marine products include 372
freezing units with a daily processing capacity of 10,320 tonnes and
504 frozen storage facilities with a capacity of 138,229.10 tonnes.
Apart from these, there are 473 pre-processing centres and 236 other
storages.
Aquaculture is one of the fastest-growing food producing sectors in the world, with an annual growth of around seven per cent.
India
is the second-largest producer of fish, both overall and from
aquaculture. Fish and fishery products would be mostly sourced from
aquaculture and culture-based capture fisheries in reservoirs as capture
fisheries’ growth the world over is stagnant.
Meat and poultry processing Today,
India’s free-ranging, steroid and fat-free meat is winning worldwide
acceptance. About 40,000 veterinary centres and numerous research
stations ensure that India’s meat and poultry products meet the most
stringent quality checks worldwide.
The production of meat and
meat products has shown an impressive growth. The total meat production
in the country is four million tonnes, which includes beef, buffalo
meat, mutton, goat meat, pork and poultry meat.
However, only
about one per cent of the total meat is converted into value-added
products like sausages, ham bacon, luncheon meat, kababs and meatballs.
The
current level of exports of meat and meat products from India is $190
million, the major destinations being the countries in the Middle-East
and South-East Asia.
The meat processing sector has attracted a
total investment of $471.1 million in the last six years (i.e. since the
initiation of the liberalisation process, including foreign direct
investment [FDI] of $116.1 million).
The poultry industry is
among the fastest-growing sectors rising at a rate of eight per cent per
year. The vertical integration of poultry production and marketing has
lowered the costs of production, marketing margins and consumer prices
of poultry meat.
There are eight integrated poultry processing units in the country, which hold a significant share in the industry.
While
the production of agricultural crops has been rising at a rate of 1.5
to two per cent per annum, that of eggs and broilers has been rising at a
rate of eight to ten per cent per annum.
As a result, India is now the world’s fifth-largest egg producer and the eighteenth-largest producer of broilers.
Packaged food industry in India The year 2013 was a good for food manufacturers in India. Packaged food in India grew at a slightly faster pace than in 2012.
Changing
lifestyles and convenience were the major factors which led to
double-digit growth rates. Despite challenges like food inflation and
increases in taxes, value sales continued to grow.
Healthier food options started to become more prominent on retail shelves, and attracted consumer attention.
Many
low penetrated packaged food categories, such as cheese, pasta and
ready meals, have gained greater popularity and increased shelf space.
Independent small grocers continued to dominate the distribution of packaged food over the review period.
Factors
such as convenience because of proximity to homes, as well as free home
delivery to consumers, worked to their advantage.
However,
supermarkets and hypermarkets also saw an impressive increase in sales
during the review period, because of such benefits as discounts,
freebies, loyalty programmes and a wider range of products to choose
from.
Factors driving the sector The consumption
patterns in India have been undergoing a visible shift. Earlier, the
share of cereal products was the highest, followed by milk and milk
products; vegetables, edible oil and meat products.
However, in
recent years, the growth rates for fruit, vegetables, meat and dairy
products have been higher than cereals and pulses.
This shift,
in turn, implies that there is also a need to diversify the food
production base to match the changing consumption preferences.
The key aspects which needs to be looked into are:
- Lack of adequate quality control;
- Supply chain inefficiency and middlemen’s involvement;
- Increasing inventory carrying costs;
- Higher taxation;
- Higher packaging costs, and
- Cultural preference of fresh food
(The author is quality management and food safety officer, eatitude)
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