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
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.
India is the front ranking producer of many perishable commodities
Milk
Largest Producer
91 Mn T
Cattle / buffaloes
Largest in the world
283 million
F&V
#2 in the world
151 Mn T
Fisheries
Marine: 2.7 Mn T
Inland : 3.1 Mn T
Food Grains
#2 in the world
(220 Mn T)
Sugarcane
# 2 in the world
(245 Mn T)
3
Tea
Largest Producer
(0.85 Mn T)
Goat & Sheep
182 million
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
Significant Opportunity
• 46 out of 60 soil
types exist in India
India as a global sourcing
hub
• 20 agri-climatic
regions
• Sunshine hours
and day length are
ideally suited for
round the year
cultivation
4
• Among the top five producers
worldwide of rice, wheat, groundnuts,
tea, coffee, tobacco, spices, sugar and
oilseeds.
Food Processing Sector in India
Producer
Huge wastage across the supply chain leads to lower level of processing and hence low value
addition…
Field Losses
(Pest, Diseases, Rodents etc))
Developing
Countries –
Relatively
high losses
in the initial
parts of the
value chain
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)
Consumer
Marketing
(e.g. spoilage, rotting in stores)
Wastage by Consumer
(e.g. overeating, food wastage)
Field
5
Rich
Countrie
s – High
losses at
a later
stage in
the food
chain
Britt-Louise Andersson, SIWI
Fork
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
6
Level of Processing across Segments
Segment
India
Other Countries
US A (65 %), Philippines (78%)
Fruits and
Vegetables
2.2%
Marine
26%
Poultry
6%
Buffalo Meat
20%
Milk
35% 60-75% in developed countries
China (23)%;
60-70% in developed countries
7
India’s competitiveness in global markets
India 's s ha re in glo ba l pro duc tio n (2 0 0 1-0 3 )
Vegetables
11%
India 's s ha re in glo ba l e xpo rt s
Fruits
15%
(1991-93)
2.1%
0%
5%
10%
15%
20%
Vegetables
(2001-03)
1.7%
Indian prices as a % o f wo rld prices (2001-03)
0.4%
Vegetables
Fruits
53%
0.5%
Fruits
0%
63%
0%
20%
40%
60%
80%
Source: UN COMTRADE Statistics, World Bank Staff
Estimates
100%
2%
4%
6%
8%
10%
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 21st 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…
9
Indian Food Trade
India exports mostly to the proximate countries…
40%
South Asia
34%
35%
29%
Share of Trade
30%
Middle East
25%
East Asia
20%
17%
Western Europe
15%
10%
10%
Rest of the World
USA & Canada
7%
5%
Africa
1%
1%
0%
0
2000
4000
6000
8000
10000
12000
14000
Distance (Km s)
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
10
Industry Growth Drivers - Demand
Urbanisation, rise in disposable incomes and changing lifestyle and aspirations are leading to
significant demand for processed food…
Increasing spends on
health foods
Increasing
Urbanisation –
Lifestyle and
Aspirations
Increasing Nuclear
Families and Working
Women
Food
Processing
Demand
Drivers
Changing
demographics – Rise
in disposable incomes
Demand for
Functional Foods
Organised Retail and
Private Label
Penetration
11
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
12
Challenges in the Sector
Challenge 2: R&D
Key Problems in Indian 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
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
13
Challenges in the Sector
Challenge 3: Human Resource Development
The industry is in direct need of highly skilled/trained manpower across different levels to handle various operations
•
•
Emphasize food safety in storage conditions
•
Training in Warehousing and Distribution
Regulatory
and trade
issues
Industry level
Managerial and
Operational level HRD
Warehousing &
Distribution
•
Platform to make policy
decisions
•
Inclusion in academic
curriculum
•
Food safety
awareness
•
Auditing and
inspection skills
•
Institutional Development
Process development
•
Focus on packaging techniques, storage and safe
transportation
•
14
Enforcement
Food production
Challenges in the Sector
Challenge 4: Supply Chain Hindrances
Necessity for a Strategic focus on Supply Chain in FPI
Seasonality
Seasonal production Vs Year-round Processing Operations
Perishability Highly perishable nature of raw materials
Variability
Variable quality of raw materials due to cyclic variations and changing weather conditions
• 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.
15
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 ma
Increasing GlobalisationStringent Safety Norms Rising 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
16
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.
17
Opportunities
High domestic demand and supportive policy provides significant opportunities across the
Food Processing value chain…
Policy Support
Farm Inputs
Farming
M arketing/
Aggregator
Processing
Logistics
(Food)
Retail/
Food
Services
Consumer
Product Design
Distribution
Financial & Business
Services
Key
Opportunities
18
Transport Services/
Infrastructure
Quality Control
M arket Intelligence
Marketing
Mega Food Parks
Food Safety
Management
Systems
Quality Control Labs
Integrated Cold
Chain
Training Facilities
Joint Research
Facilities
Backward and
Forward Integration
B2B Sales
Customised Farm
Equipment
Thanks for your attention!
This is not an end ……