Agri Processing
- The food processing sector is a crucial component of the overall food supply chain.
- It involves the transformation of raw agricultural and livestock products into processed and value-added food products that are suitable for consumption.
- This sector encompasses a wide range of activities, technologies, and processes aimed at making food products safer, more convenient, and longer-lasting, while also enhancing their flavour and nutritional value.
- During the last eight years ending 2022-23, the food processing industry has been growing at an average annual growth rate (AAGR) of around 5.35 per cent at 2011-12 prices.
- However, India ranks 12 in the export of food products due to our inability to move up in the value chain hindered by several challenges.
- Sector Size and Contribution: Despite the low processing levels, the industry is already quite large. The Gross Value Added (GVA) of food processing is estimated at Rs.2.24 lakh crore, contributing roughly 1.69% to the country’s total GVA.
- Major Sectors:
- Dairy: India is the largest producer of milk, and dairy processing includes products like milk powder, cheese, butter, and yogurt.
- Fruits and Vegetables: Processing includes canning, dehydration, and preparation of juices, jams, and pickles.
- Meat and Poultry: Involves processing of meat products, including frozen and ready-to-eat items.
- Marine Products: Processing of fish, shrimp, and other seafood products for domestic and export markets.
- Grains and Cereals: Includes milling of rice, wheat, and pulses, and production of flour, pasta, and breakfast cereals.
- Beverages: Processing of tea, coffee, alcoholic and non-alcoholic drinks.
- Packaged Foods: Ready-to-eat and convenience foods, snacks, and confectionery.
- Main Drivers:
- Urbanisation: Increased demand for processed foods due to changing lifestyles and dietary habits.
- Income Growth: Rising disposable incomes lead to higher consumption of processed and packaged foods.
- Export Opportunities: Strong global demand for Indian processed food products.
- Government Support: Policies and initiatives to promote food processing, such as the Pradhan Mantri Kisan Sampada Yojana (PMKSY).
- Key Challenges:
- Lack of Cold Chain and Storage: Inadequate cold storage and transportation facilities result in significant post-harvest losses of perishable goods. This not only affects food quality but also impacts the income of farmers.
- Fragmented Supply Chain: The supply chain in India is highly fragmented, leading to inefficiencies and increased costs. Poor road and rail infrastructure can result in delays and losses during transportation.
- Complex Regulations: The food processing industry is subject to a complex web of regulations, licences, and permits, which can be challenging for businesses to navigate.
- Inconsistent enforcement of regulations can lead to unfair competition and quality issues.
- Food Safety Concerns: Ensuring food safety and quality standards across the supply chain remains a significant challenge. Contaminated or adulterated food products can harm public health and damage the reputation of the sector.
- Research and Development: Limited investment in research and development inhibits innovation and the development of new, value-added products.
- India’s research and development (R&D) expenditure-GDP ratio of 0.7% is very low when compared to major economies and is much below the world average of 1.8%.