The processed food industry is one of the largest in India. It is ranked fifth in terms of export, expected growth, production and consumption. As a matter of fact, increasing incomes are accompanied by changes to our food habits.
Fuelled by large disposable incomes, a marked change is seen in the food consumption patterns. A significant part of this consumptional change is enhanced by the processed food market, which accounts for at least 30 per cent of the food market.
Industry sources claimed that the food processing industry would attract investments to the tune of $33 billion spread over ten years and get employment for a massive group of the currently employable group.
The government, on its part, has formulated and implemented several plans and schemes to provide financial assistance, initially to set up food processing units and later to modernise as well. There is excellent support with regard to infrastructure, research and human resource development, in addition to other promotional aspects, to encourage the food processing industry.
The processed food industry can be broadly classified as:
- Grain processing;
- Fruit, vegetable and dairy processing;
- Fisheries;
- Meat and poultry processing, and
- Packaged food
Grain processing
It refers to the processing of grains and grain flours that have been significantly modified from their natural composition. The modification process generally involves the mechanical removal of bran and germ, either through grinding or selective sifting.
However, in case of some grains, the removal of fibre, coupled with fine grinding, results in a slightly higher availability of grain energy for use by the body.
Primary milling of grains is the most important activity in the grain processing segment of the industry. However, primary milling adds little to shelf life, wastage control and value addition.
Around 65 per cent of the rice produced is milled, mostly in modern rice mills. However, the sheller-cum-huller mills in operation give low recovery.
Wheat is processed for flour, refined wheat flour, semolina and grits. Dal milling is the third-largest segment in the grain processing industry, and has approximately 11,000 mechanised mills in the organised segment.
Indian rice, especially basmati rice, has gained international recognition, and is a premium export product.
Branded grains and grain processing are now gaining popularity.
Fruit, vegetable and dairy processing
The fruit and vegetable processing industry is highly decentralised, and a large number of units are in the cottage or household and small-scale sector, having small capacities of up to 250 tonnes per annum.
Since 2000, such segments as ready-to-serve beverages, fruit juices and pulps, dehydrated and frozen fruits and vegetable products, pickles, processed mushrooms and curried vegetables have shown significant growth, and units engaged in these are largely export-oriented.
A significant thrust can be given to this sector by strengthening the linkages between farmers and processors.
The weak linkage between farmers and markets, as well as, farmers and processing companies has brought about inefficiencies in the supply chain and encouraged the involvement of middlemen.
The government of India’s National Agriculture Policy envisages the participation of the private sector through contract farming and land leasing arrangements, which not only assures supply of raw material for processing units, but also a market for agriculture produce, accelerate technology transfer and capital inflow into the agriculture sector.
The domestic industry is yet to change its preference in favour of processed foods. The consumption of value-added fruits and vegetables is low compared to the primary processed foods and fresh fruit and vegetables. The inclination towards processed foods is mostly visible in urban centres.
India has one of the highest livestock populations in the world, accounting for about 50 per cent of its buffalo and 20 per cent of its cattle population, most of which are milch cows and milch buffalo.
India’s dairy industry is considered as one of the most successful development programmes in the post-Independence era. Dairy cooperatives account for the major share of the processed liquid milk marketed in India.
Milk is processed and marketed by 170 milk producers’ cooperative unions, which federate into 15 state cooperative milk marketing federations.
Over the years, several brands have been created by cooperatives like the Gujarat Cooperative milk Marketing Federation (GCMMF), which markets its products as Amul; Vijaya (Andhra Pradesh); Verka (Punjab); Saras (Rajasthan); Nandini (Karnataka), Milma (Kerala) and Gokul (Kolhapur, Maharashtra).
Fisheries
India is the second-largest producer of fish in the world, contributing to 5.43 per cent of the global fish production. India is also a major producer of fish through aquaculture. It ranks second in the world after China.
The total fish production during 2010-11 is at 8.42 million metric, tonnes with a contribution of 5.20 million metric tonnes from the inland sector and 3.22 million metric tonnes from the marine sector respectively.
The processing of marine produce into canned and frozen forms is carried out almost entirely for the export market.
The infrastructure facilities for processing of marine products include 372 freezing units with a daily processing capacity of 10,320 tonnes and 504 frozen storage facilities with a capacity of 138,229.10 tonnes. Apart from these, there are 473 pre-processing centres and 236 other storages.
Aquaculture is one of the fastest-growing food producing sectors in the world, with an annual growth of around seven per cent.
India is the second-largest producer of fish, both overall and from aquaculture. Fish and fishery products would be mostly sourced from aquaculture and culture-based capture fisheries in reservoirs as capture fisheries’ growth the world over is stagnant.
Meat and poultry processing
Today, India’s free-ranging, steroid and fat-free meat is winning worldwide acceptance. About 40,000 veterinary centres and numerous research stations ensure that India’s meat and poultry products meet the most stringent quality checks worldwide.
The production of meat and meat products has shown an impressive growth. The total meat production in the country is four million tonnes, which includes beef, buffalo meat, mutton, goat meat, pork and poultry meat.
However, only about one per cent of the total meat is converted into value-added products like sausages, ham bacon, luncheon meat, kababs and meatballs.
The current level of exports of meat and meat products from India is $190 million, the major destinations being the countries in the Middle-East and South-East Asia.
The meat processing sector has attracted a total investment of $471.1 million in the last six years (i.e. since the initiation of the liberalisation process, including foreign direct investment [FDI] of $116.1 million).
The poultry industry is among the fastest-growing sectors rising at a rate of eight per cent per year. The vertical integration of poultry production and marketing has lowered the costs of production, marketing margins and consumer prices of poultry meat.
There are eight integrated poultry processing units in the country, which hold a significant share in the industry.
While the production of agricultural crops has been rising at a rate of 1.5 to two per cent per annum, that of eggs and broilers has been rising at a rate of eight to ten per cent per annum.
As a result, India is now the world’s fifth-largest egg producer and the eighteenth-largest producer of broilers.
Packaged food industry in India
The year 2013 was a good for food manufacturers in India. Packaged food in India grew at a slightly faster pace than in 2012.
Changing lifestyles and convenience were the major factors which led to double-digit growth rates. Despite challenges like food inflation and increases in taxes, value sales continued to grow.
Healthier food options started to become more prominent on retail shelves, and attracted consumer attention.
Many low penetrated packaged food categories, such as cheese, pasta and ready meals, have gained greater popularity and increased shelf space.
Independent small grocers continued to dominate the distribution of packaged food over the review period.
Factors such as convenience because of proximity to homes, as well as free home delivery to consumers, worked to their advantage.
However, supermarkets and hypermarkets also saw an impressive increase in sales during the review period, because of such benefits as discounts, freebies, loyalty programmes and a wider range of products to choose from.
Factors driving the sector
The consumption patterns in India have been undergoing a visible shift. Earlier, the share of cereal products was the highest, followed by milk and milk products; vegetables, edible oil and meat products.
However, in recent years, the growth rates for fruit, vegetables, meat and dairy products have been higher than cereals and pulses.
This shift, in turn, implies that there is also a need to diversify the food production base to match the changing consumption preferences.
The key aspects which needs to be looked into are:
- Lack of adequate quality control;
- Supply chain inefficiency and middlemen’s involvement;
- Increasing inventory carrying costs;
- Higher taxation;
- Higher packaging costs, and
- Cultural preference of fresh food
Source: FnBnews.com
Cerule Consulting 