Food processing is a sunrise industry in India and is increasingly seen as a potential source for driving the rural economy as it brings about synergy between the consumer, industry and agriculture. It contributes 9% to manufacturing GDP and has an annual growth rate of 8%. But this industry is facing the following challenges:
- Inadequate infrastructure facility like cold storage and food parks
- Lack of processing facilities leading to less value addition
- Lack of technology and applied research
- Lack of skilled manpower
- Lack of organized retail
- Regulatory challenges: Food supply chain is regulated through APMC acts of States. Multiple clearances are required for setting up of food processing units.
India possesses a large arable land resource of 160 million hectares with 127 Agro-climatic zones and has 46 of the 60 soil types in the world. It is the largest producer of milk and second largest producer of fruits and vegetables. Hence there exist numerous opportunities and growth drivers for the food processing sector in India, some of which are mentioned below:
• With favourable economic & cultural transformation, shift in attitudes & lifestyles, consumers are experimenting with different cuisines, tastes and new brands.
• One-third of the population will be living in urban areas by 2022 and this urbanization will shift the consumption towards packaged and ready-to-eat foods.
• Demand for processed food rising with growing disposable income, urbanisation young population, growing middle-class, and nuclear families.
• The large population base & distinct consumer segments support customised offerings/ new categories and brands within each segment.
Food processing will result in increasing the farmers’ income in the following ways:
• Consistent demand of Agri-products round the year and hence no distress sell by the farmers during harvesting season.
• Food processing will result in increased demand of Agri-products in domestic as well as export market.
• Reduce wastage of Agri-products.
• Generate employment in rural areas.
• Will promote crop diversification and will help in increase in yield.
The government’s recent initiatives of allowing 100% FDI in food processing and 100% FDI in multi brand retail for food products will go a long way in development of the food processing industry and increase in farmers’ income.