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RTE & RTC fuel food processing growth engine
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Monday, 16 January, 2017, 08 : 00 AM [IST]
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Dr T P Sethumadhavan
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The food processing industry in the country has been showing spectacular growth over the last decade. There are huge opportunities for ready-to-eat and ready-to-cook food products in the country. Women are not confined to the kitchen and are emerging as home managers. Food outsourcing is acquiring momentum across the country. Food movements have also started changing. India has more number of younger populations of 51 per cent within the average age group of 26 years. They are ready to work nearly 15 hours per day and require energy drinks and powerful foods. Food movements are also showing changes. The habit of delaying dinner creates the possibility of stabilising a protein-rich food between 6 and 7 pm in the country. Of the total new born in the country, 42 per cent are below the normal birth weight of 2 kg. Protein malnutrition is the biggest issue in the country which causes reduced birth weight and stunted growth.
Emerging trends
Recent demonetisation issues and emergence of GST will pave quantum jump in Indian food processing sector. It will promote entrepreneurship and e-commerce, strengthen food retail business and relax tax norms. Indian food retail market is expected to reach Rs 61 lakh crore by 2020. The Indian food processing industry accounts for 32 per cent of the country's total food market, one of the largest industries in India and is ranked fifth in terms of production, consumption, export and growth trends.
In India, the food sector has emerged as a high-growth and high-profit sector due to its immense potential for value addition, particularly within the food processing industry. The food industry, which is currently valued at US$39.71 billion, is expected to grow at a Compounded Annual Growth Rate (CAGR) of 11 per cent to US$65.4 billion by 2018. Food and grocery account for around 31 per cent of India’s consumption basket.
The ministry of food processing industries of Government of India has been instrumental in the growth and development of the food processing industry which has approved proposals for joint ventures (JV), foreign collaborations, industrial licences and 100 per cent export-oriented units. Indian food and grocery market is the world’s sixth- largest, with retail contributing 70 per cent of the sales. It contributes around 14 per cent of manufacturing Gross Domestic Product (GDP), 13 per cent of India’s exports and six per cent of total industrial investment. Indian food service industry is expected to reach US$78 billion by 2018. With the onset of demonetisation, e-commerce in food retail sector is witnessing quantum jump in the country.
Government initiatives
In order to promote food processing industries and exploit the potential of domestic and international markets for processed food products, major initiatives are taken by the Government of India. These include allocation of Rs 1,500 crore and implementation of various measures under the Merchandise Exports from India Scheme including setting up of agencies for aquaculture and fisheries in coastal states and export incentives for marine products.
The Union Budget 2016-17 has proposed 100 per cent FDI through Foreign Investment Promotion Board route in marketing of food products produced and manufactured in India. Ration cards in India have been digitised and 42 per cent of the digitised ration cards are linked with Unique Identification (UID) or Aadhaar cards. 100 per cent Foreign Direct Investment (FDI) in multi-brand retail with 100 per cent local sourcing condition, will act as a catalyst for the food processing sector, thereby controlling inflation, uplifting livelihood status of farmers and creating more jobs in the country.
Creation of infrastructure
The Food Safety and Standards Authority of India (FSSAI) has issued new rules for importing products, to address concerns over the entry of sub-standard items and simplify the process by setting shelf-life norms and relaxing labelling guidelines. MoFPI has announced a scheme for Human Resource Development (HRD) in the food processing sector which is being implemented through state governments under the National Mission on Food Processing. The scheme envisages creation of infrastructure for degree/diploma courses in food processing sector, Entrepreneurship Development Programme (EDP), Food Processing Training Centres (FPTC) and training at state/national level recognised institutions.
The Food Safety and Standards Authority of India (FSSAI) under the ministry of health and family welfare has issued the Food Safety and Standards (Food Product Standards and Food Additives) Regulations, 2011, and Food Safety and Standards (Contaminants, Toxins and Residues) Regulations, 2011, which prescribe the quality and safety standards, respectively for food products. MoFPI has taken some new initiatives to develop the food processing sector which will also help to enhance the incomes of farmers and export of agro and processed foods among others.
The government has approved the setting up of five numbers of Mega Food Parks in the states of Bihar, Maharashtra, Himachal Pradesh and Chhattisgarh and is in the process of establishing 42 such mega food parks across the country in next three to four years.
In the Budget 2015-16, a corpus of Rs 2,000 crore was created under National Bank for Agriculture and Rural Development (NABARD), to provide cheaper credit to food processing industry. Excise duty on plant and machinery for packaging and processing has been brought down to six per cent from 10 per cent. India ranks 12th in the world in exports of food and food products in 2015. Major industries constituting the food processing sector are grain milling, sugar, edible oils, beverages, fruits & vegetables processing and dairy products.
The contribution of the food processing sector to the Gross Value Addition (GVA) in 2014-15 amounts to US$22 billion at 2011-12 prices.
In 2014-15, GVA in food processing grew by 5.78%. The share of food processing sector in GVA of manufacturing sector was 8.6% in 2014-15. Investment in fixed capital in registered food processing sector had grown from US$24.5 billion in 2012-13 to US$25.85 billion in 2013-14, making a growth rate of 6%.
Liberalisation and the growth of organised retail has made the Indian market more attractive for global players; with a large agricultural resource base, abundant livestock and cost-competitiveness, India is fast emerging as a sourcing hub of processed foods. Rising income levels and affluence and a growing middle-class are the major strengths in this sector. It has been projected that one-third of the population will be living in urban areas by 2020 with increasing desire for branded food as well as increased spending power. Large distinct consumer segments to support customised offerings/ new categories and brands within each segment. Consumption in India is driven towards packaged and ready-to-eat foods. With favourable economic & cultural transformation, shift in attitudes & lifestyles, consumers are experimenting with different cuisines, tastes and new brands. There is an increase in awareness and concern for wellness and health, high protein, low fat, wholegrain and organic food. Exports of food items have been rising steadily, the main export destinations being the Middle-East and South-East Asia.
Worldwide requirement for commercial beverages continues to grow – soft drinks, juices, bottled waters, coffee, tea, beer, cider, wines, and so on. Successful beverage production requires getting the most out of raw materials and maintaining desired end-product characteristics through safe, cost-effective and sustainable multi-stage processing.
F&B manufacturing
Food and beverage manufacturing plants transform raw agricultural materials into products for intermediate or final consumption by applying labour, machinery, energy, and scientific knowledge. Some products may serve as inputs for further processing (such as syrup for manufacturing soda).
Dairy industry
Dairy industry in India will witness spectacular growth during 2017. During the last 10 years annual growth rate in Indian dairy industry has been 4.6 per cent as compared to global growth rate of 2.2 per cent. During this period, per capita consumption of milk in the country is 340 gm per day as against 299 gm globally. India’s milk production has touched 155.499 metric tonne during 2015-16. Consumption is increasing at a faster rate in the country.
During 2017, there will be huge demand for dairy products in the country. Milk and milk products’ price will increase by more than 10 per cent which will facilitate farmers to get more income through dairying. Educated unemployed youths may emerge as entrepreneurs and venture into dairying. The country will witness spectacular growth in dairy processing units. Cost of raw materials for cattle feed will increase marginally during 2017. By the end of March 2017, 50 per cent scarcity of milk powder will exist in the country which will increase the requirement of fluid milk and in turn benefit the dairy farmers. Milk and milk products are set to cost more, as dairy cooperatives such as Amul and Mother Dairy are preparing to increase prices in the coming months and boost the payouts to farmers, according to R S Sodhi, managing director, Gujarat Cooperative Milk Marketing Federation, which owns the Amul brand.
During 2017, number of commercial dairying will increase in the urban and peri-urban areas of the metros and big cities. These dairies mainly cater to the needs of the urban consumers. Their average herd size ranges from having 10 to 20 milch animals to more than 50 milch animals. Since more than 90 per cent dairying is at the subsistence level, the emerging trends will increase the county’s milk production marginally, 20 per cent higher when compared to the previous year.
Meat processing
It includes livestock and poultry slaughter, processing, and rendering, and is the largest single component of food and beverage manufacturing. Important components include dairy (13 per cent), beverages (12 per cent), grains and oilseeds (12 per cent), fruits and vegetables (8 per cent), and other food products (11 per cent). Meat processing is also the largest component (17 per cent) of the food sector's total value added, followed by beverage manufacturing (16 per cent).
Going forward, the adoption of FSSA 2006, food safety and quality assurance mechanisms such as Total Quality Management (TQM) including ISO 9000, ISO 22000, Hazard Analysis and Critical Control Points (HACCP), Good Manufacturing Practices (GMP), Good Retail Practices (GRP) and Good Hygienic Practices (GHP) by the food processing industry offers several benefits. It would enable adherence to stringent quality and hygiene norms and thereby protect consumer health, prepare the industry to face global competition, enhance product acceptance by overseas buyers and keep the industry technologically abreast of international best practices.
Focus on adulteration
Recent amendments made to the Food Safety and Standards Act 2006 (FSSA) has laid focus on adulteration and food additives to food safety, with emphasis on microbiological standards especially for milk and milk products as well as meat and meat products and eggs. Amendments with regard to microbiological standards incorporated strict norms for fruits, vegetables and their products with special reference to Listeria monocytogenes, Salmonella, E.coli and vibrio cholera. At a time when toxicity through consumption of adulterated foods is emerging across the country this assumes significance.
Pasteurised juices means fruit and vegetable juices that are subjected to standard process of pasteurisation to destroy or inactivate harmful organisms. Carbonated fruit beverage means any beverage or drink which is prepared from fruit juice and water or carbonated water and contains sugar, dextrose, invert sugar or liquid glucose either in single or in combination which may contain peel oil and fruit essences. Frozen means fruits and vegetables including their products, subjected to a freezing process and maintained at temperature of -18 degree Celsius.
The product shall conform to the microbiological requirement given in Appendix B of the Food Safety and Standards (Food Products Standards and Food Additives) Regulation, 2011. Ensuring FSS Act is really a value addition for food products in the food industry which shows spectacular growth in the country. Multi Drug Resistance (MDR) is emerging as a major health hazard across the world. By 2050, it has been forecasted that MDR will cause death of 50 million people across the globe. Control of use of antibiotics, feed additives, growth promoters, and so on will reduce the alarming rate of MDR.
References
Ministry of Food Processing Industries, Agricultural and Processed Food Products Export Development Authority (APEDA), media reports and press releases, Department of Industrial Policy and Promotion (DIPP), Press Information Bureau (PIB), Confederation of Indian Industries (CII), Union Budget 2015-16, and Union Budget 2016-17.
(The author is the director of entrepreneurship at Kerala Veterinary and Animal Sciences University, Pookode. He can be contacted at tpsethu2000@gmail.com)
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