1. A Presentation On “Opportunities in Agro-Processing Sector in India ” By Prof. Vinod Malkar Sanjivani Rural Education Society, College of Engineering, Dept. of MBA, Kopargaon, Dist: Ahmednagar, Maharashtra, India 1

2. Introduction India is one of the biggest emerging markets, with over 1.2 billion population and a 300 million strong middle class. India with a land area of 2.97 million sq. km., 180 million hectares of arable land (one tenth of the world), 56 million hectares irrigated land. India is the second largest food producer in the world and having potential to become first. But fruits and vegetables just about 2.2 per cent of the production is processed compared to 30 per cent in Thailand and close to 80 per cent in Philippines and Malaysia. It is estimated that a one per cent growth in food processing has the potential to generate an additional direct employment for five lakh people, and indirect employment for 15 lakh individuals (Rana kapoor 2010) This Research will give roadmap for development of food and Agrobase industries.

3. 3 Milk Largest Producer 91 Mn T F & V #2 in the world 151 Mn T Food Grains #2 in the world (220 Mn T) Cattle / buffaloes Largest in the world 283 million Tea Largest Producer (0.85 Mn T) Sugarcane # 2 in the world (245 Mn T) Goat & Sheep 182 million Fisheries Marine: 2.7 Mn T Inland : 3.1 Mn T India is the front ranking producer of many perishable commodities

4. 4 Food Processing Sector in India India has huge supply advantages due to diverse agro-climatic conditions and wide ranging raw material base… 52% cultivable land compared to 11% world average All 15 major climates in the world exist in India 46 out of 60 soil types exist in India 20 agri-climatic regions Among the top five producers worldwide of rice, wheat, groundnuts, tea, coffee, tobacco, spices, sugar and oilseeds. Sunshine hours and day length are ideally suited for round the year cultivation Significant Opportunity India as a global sourcing hub

5. 5 Food Processing Sector in India Huge wastage across the supply chain leads to lower level of processing and hence low value addition… Field Losses (Pest, Diseases, Rodents etc)) Pre-Processing (e.g. inefficient harvesting, drying, milling) Transport (e.g. spillage, leakage) Storage (e.g. technical deficiencies) Processing & Packaging (e.g. excessive peeling, washing ) Marketing (e.g. spoilage, rotting in stores) Rich Countrie s – High losses at a later stage in the food chain Consumer Producer Field Fork Wastage by Consumer (e.g. overeating, food wastage) Developing Countries – Relatively high losses in the initial parts of the value chain Britt-Louise Andersson, SIWI

6. 6 Some Identified problems … Infrastructure for marketing of perishables  Primary grading/ collection centers - non existent  Warehousing and cold storage - inadequate  Cold chain - non existent  Quality certification system - non existent  Transportation for perishables - non existent  Rural markets - complete lack of infrastructure  Wholesale markets - in government control, lack modern facilities  Private / direct markets - not permitted Post harvest losses: 25 to 30 % in perishables

7. 7 Level of Processing across Segments SegmentIndiaOther Countries Fruits and Vegetables 2.2% US A (65 %), Philippines (78%) China (23)%; Marine26% 60-70% in developed countries Poultry6% Buffalo Meat20% Milk35%60-75% in developed countries

8. Source: UN COMTRADE Statistics, World Bank Staff Estimates India’s competitiveness in global markets

9. 9 Indian Food Trade Supported by a committed government in improving the food trade and providing a conducive atmosphere for agriculture, India is a net exporter of agricultural products. … India’s Position in Global Trade India stands a distant 21 st for the year 2007, with a 1.4% share in the global trade. During the period 1980-2007, India’s share in the global exports have increased from 1.1% to just 1.4%, the majority of the increase happening in this decade. However, Export of Processed Food and Beverages is growing faster than the overall Food and Beverages…

10. 10 South Asia Middle East East Asia Western Europe Rest of the World USA & Canada Africa Indian Food Trade India exports mostly to the proximate countries … India’s geographical situation gives it the unique advantage of connectivity to Europe, the Middle East, Japan, Singapore, Thailand, Malaysia and Korea. Globally, most of the countries import from countries that are geographically closer. For example, 45% of USA imports are from Canada and Mexico. EU imports 50% from Spain, Netherlands, France, Italy, Belgium and Germany

11. 11 Industry Growth Drivers - Demand Urbanisation, rise in disposable incomes and changing lifestyle and aspirations are leading to significant demand for processed food… Increasing Urbanisation – Lifestyle and Aspirations Increasing Nuclear Families and Working Women Increasing spends on health foods Food Processing Demand Drivers Changing demographics – Rise in disposable incomes Demand for Functional Foods Organised Retail and Private Label Penetration

12. 12 Challenges in the Sector Challenge 1: Productivity Issues India's overall agriculture productivity is still low… Source: Innovative technology to ensure food security, UNI (United News of India), 25 March 2009

13. 13 Challenges in the Sector Challenge 2: R&D Commodity-centric R&D Lack of a holistic approach involving a matrix of farm enterprises Compartmentalization of R&D agencies Lack of effective bilateral flow of information amongst research, extension, and implementation departments Poor validation and feedback mechanisms Lack of large-scale on-farm validation of techniques and feedback thereon, leading to practically no scope for enhancement Key Problems in Indian R&D A seven-step mechanism is required to set-up a research-development-technology transfer continuum involving all stakeholders 1.Problem identification and prioritization 2.Convergence of existing technologies to match the need 3.Generation of need-based viable technologies using the holistic farming system approach 4.On-farm assessment and evaluation 5.Feedback on the technologies 6.Refinement of technologies, if necessary 7.Ensuring timely availability of inputs

14. 14 Challenges in the Sector Challenge 3: Human Resource Development Warehousing & Distribution Industry level Enforcement Regulatory and trade issues Food production Food safety awareness Auditing and inspection skills Process development Managerial and Operational level HRD Institutional Development Focus on packaging techniques, storage and safe transportation Platform to make policy decisions Inclusion in academic curriculum Emphasize food safety in storage conditions Training in Warehousing and Distribution The industry is in direct need of highly skilled/trained manpower across different levels to handle various operations

15. 15 Challenges in the Sector Challenge 4: Supply Chain Hindrances Necessity for a Strategic focus on Supply Chain in FPI This situation discourages processing units to reach optimum size and achieve economies of scale. Additionally, lack of consistent quality hinders small scale units to build brand equity for themselves in international and domestic markets. Seasonality Perishability Variability Seasonal production Vs Year-round Processing Operations Highly perishable nature of raw materials Variable quality of raw materials due to cyclic variations and changing weather conditions

16. 16 Challenges in the Sector Challenge 5: Low Adherence to Quality Standards Increasing need for food processors to adhere to quality standards for both domestic as well as export market Increasing GlobalisationStringent Safety NormsRising Customer awareness on Quality and Health Lack of requisite controls across the agri-value chain-from farm inputs to storage of produce to food processing techniques Poor compliance to requisite food standards in export countries Absence of basic standardization and certification infrastructure

17. 17 Opportunities Food Processing sector has strong synergies with the inclusive growth mandate of the government and also provides a platform to significantly transform the face of rural India… A developed Food Processing sector will help overcome the biggest challenges in front of India: Low farmer income and high subsidies High wastage along the value chain Poor hygiene and safety standards Given the huge potential opportunity, players should consider the constraints as opportunities waiting to be exploited and make investments for the overall growth of the industry.

18. 18 Opportunities High domestic demand and supportive policy provides significant opportunities across the Food Processing value chain… Key Opportunities Mega Food Parks Integrated Cold Chain Backward and Forward Integration Food Safety Management Systems Training Facilities B2B Sales Quality Control Labs Joint Research Facilities Customised Farm Equipment

19. Thanks for your attention! This is not an end ……