Food Processing and Related Industries in India

INTRODUCTION #

Food processing is the transformation of raw ingredients into food, or of food into other forms. Food processing typically takes clean, harvested crops or butchered animal products and uses these to produce attractive, marketable and often long shelf-life food products. E.g. – milk to butter, cheese, ghee, or various pickles etc.

Significance #

Food processing industry has enormous signif- icance for India’s development because of the vital linkages and synergies that it promotes between the two pillars of our economy, industry and agricul- ture. Fast growth in the food processing sector and progressive improvement in the value addition chain are also of great importance for achieving favour- able terms of trade for Indian agriculture both in the domestic and international markets. Even more important is the crucial contribution that an efficient food processing industry could make in the nation’s food security.

The simple fact that the post-harvest losses are about 25 to 30 per cent in our country should serve as an eye opener for all of us. Even marginal reductions in these losses are bound to give us great relief on the food security front as well as improve the income levels of the farmers.

Government’s intervention #

It is in this context that the Government of India has given utmost priority to developing the food processing sector. The Government has taken a number of initiatives. The entire sector has been

deregulated and no license is required except in the case of alcoholic beverages. Automatic approval for foreign investment up to 51 per cent is allowed.

Even where investment is more than 51 per cent, approval is given on a case-to-case basis by the For- eign Investment Promotion Board (FIPB) per cent export-oriented units are permitted to import raw materials and capital goods free of duty. Zero duty import is also permitted, for capital goods. Export earnings are exempted from corporate tax. A number of State Governments have also announced liberal fiscal benefits for the food processing industries.

In line with this policy the Department of Food Processing Industries has launched concessional finance schemes. The schemes cover the entire spectrum of activities involved with food processing such as post-harvest infrastructure including cold chain, food quality and safety, packaging, research and development and promotion of processed food.

Scheme for Infrastructure Development #

To fulfill the need for creation of integrated and holistic infrastructure for food processing sector, Ministry of Food Processing Industries (MOFPI) had launched new Schemes in 11th FYP with strong focus on creation of modern enabling infrastructure to facilitate growth of food processing and creation of an integrated cold chain mechanism for handling perishable produce. Under the initiatives of MOFPI for strengthening infrastructure in agro and food processing sector.

Mega Food Parks Scheme #

• Mega food parks setup in 12th Five year plan.

Government allotted more than 1700 crores for it. According to govt., as of October 2016, 8 Mega food parks have become operational & all 42 would be operational in the next 2 years.

• First, a Special Purpose Vehicle (SPV) will be created to setup the Mega Food Park.
•   Government gives grant of 50%of the project cost in general and 75% for North East, Hill area, areas under integrated Tribal development plan.
• Maximum of Rs 50 crore per project.
• Out of 30 Mega Food Parks proposed during the 11th five year plan, the Ministry has taken up 15 projects under the Scheme so far. Of this, Final approval has been accorded to 8 Mega Food Parks in the States of Andhra Pradesh, Punjab, Jharkhand, Assam, West Ben- gal, Uttarakhand, Tamil Nadu and Karnataka
• In addition to these, 15 new Mega Food Parks are in the process of Government approval.

Benefits of Mega Food park #

1. Will benefit 6000 farmers / producers directly

and 25000-30000 farmers indirectly.

• Will generate Rs. 40,000 direct and indirect jobs.
• New employment opportunities created with- in rural areas, It will reduce
  • Rural-urban migration,
  • Unplanned urbanization,
  • Slums/social problems in cities.
• Will accommodate 30-40 Food Processing Industries in it.
• Will have annual turnover of Rs. 500 crore.
• Will provide efficient supply chain manage- ment from farm gate to retail outlet.
• Common facilities which will reduce the op- erational cost.
• Farmers can utilize the Cold Storages, Ripen- ing Chambers, and Ware houses for less wast- age, no distress sales.
• Good transportation facilities viz reefer trucks and vans.

Establishment   of    Cold   Chain,   Value addition and Preservation Infrastructure #

Helps creating integrated cold chain and pres- ervation infrastructure facilities without any break from farm to consumer. Under this scheme, follow- ing facilities created:

1. Minimal processing centre at the farm gate level having facilities like weighing, sorting, grading, pre-cooling, cold storage and normal storage facilities;
2. Mobile pre-cooling vans and reefer trucks;
3. Distribution hubs having facilities such as multi-purpose cold stores, variable humidity stores, blast freezing etc.
4. Food irradiation plants.

Abattoir modernization (slaughterhouse) Features: #

1. Establish new modern abattoirs.
2. Modernize existing abattoirs.
3. Promote scientific and hygienic slaughtering.
4. Modern technology for waste management.
5. Better by product utilization (bones, skin etc.)
6. Provide chilling facility, retail cold chain management etc.

National     Centre     for     Cold     Chain Development (NCCD) #

Setup during 11th FYP, under Societies Regis- tration Act, to do following:

1. Create an enabling environment for the cold chain sector
2. Help private sector involvement in cold chain sector
3. Financial assistance upto 90% to State Gov- ernments to setup/modernize/expand cold storages and ice plants via cooperatives.
4. Establish standards and protocols related to cold chain testing, verification, certification and accreditation as per international stan- dards
5. Provide technical assistance to Financial In- stitutions, Government Departments/ agen- cies, and industry for selecting cold chain

component e.g. refrigeration units, refriger- ated transport equipment, display cabinets, milk tanker etc.

• HRD and technical advisory.

Scheme for Development/Strengthening of Agricultural Marketing Infrastructure, Grading and Standardization by Ministry of Agriculture #

1. To Develop and Strengthen agricultural mar- keting infrastructure.
2. Facilitate private and cooperative sector in- vestments in marketing infrastructure.
3. Provide additional agricultural marketing in- frastructure to agriculture, dairy, poultry, fish- ery, livestock and minor forest produce.
4. Facilities for grading, standardization and quality certification of agricultural produce so farmers can get money commensurate with the quality of their produce;
5. Introduce Negotiable warehousing receipt system
6. Promote forward and future markets
7. To create general awareness and provide edu- cation and training to farmers, entrepreneurs and market functionaries.

Dairy Schemes #

Intensive Dairy Development Scheme (IDDS) #

100 per cent grants in aid for:

• Dairy processing and marketing.
  • Milk equipment for bulk milk coolers, chilling centers, refrigerated tankers and cold storage.

Dairy Entrepreneurship Development Scheme (DEDS) #

• To encourage entrepreneurs in setting up modern dairy infrastructure for clean milk production
  • Helps in bulk milk coolers, transportation facilities including refrigerated vans, cold storage facility.

Agri Export zone (AEZ) #

In 2001, By Commerce Ministry

• Total 60 AEZs in 20 states.
  • To converge the efforts of central and state governments to increase agro-exports.
  • AEZ concentrates on a particular produce/ product located in a geographically contig- uous area (e.g. Mango in Chittur District of Andhra) and coordinates the ongoing Cen- tral-State schemes to cover the entire value chain from farm to the foreign consumer, including sorting, grading, packaging, pro- cessing, exporting.

Problems faced by Agri Export Zone #

1. Government Agencies don’t take ownership or responsibility.
2. Villagers and field officers are unaware about

the scheme and its conceptual framework.

• The Design of AEZ itself doesn’t have proj- ect orientation.
• Lack of coordination/ monitoring system in AEZs.
• The investment made by central and state government has not materialized into re- al-useful assets on the ground.
• Indiscreet proliferation of AEZs in certain states. WB, Maharashtra have multiple Agro export zones while Odisha barely got one AEZ and that too in 2013,More than a decade after the scheme was launched in 2001.

Vision 2015 #

A Vision strategy and action plan has been final- ized for giving boost to growth of food processing sector. The Vision 2015 adopted by the Ministry of Food Processing aims to achieve the following:

• Trebling the size of the processed food sector.
  • Increasing level of processing of perishables from 6% to 20%.
  • Value addition to increase from 20% to 35%.
  • Share in global food trade to increase from 1.5% to 3%.
  • The level of processing for fruits and vegeta- bles is envisaged to increase to 15% in 2015.
  • The cabinet has also approved the integrated

strategy for promotion of agri business and vision, Strategy and action plan for the Food Processing Sector.

Vision Document Projections #

	2003-04 ($ billion)	2014-15 ($ billion)
Total food consumption	205
Processed Foods	126	274
Primary processed food	79	136
Value Added Food	48	138
Share of value added products in food	16%	50%

Indian food-Processing industry is poised for explosive growth driven by changing demographics, growing population and rapid urbanization along with increased government support. These factors will increase the demand for value added products and thus improve the prospects of food – processing industry in India.

The government’s focus towards food process- ing industry as a priority sector will ensure policies to support investment in this sector and attract more FDI. India with its vast pool of natural resources and growing technical knowledge base has strong comparative advantages over other nations.

According to CII has estimation, food-processing sector has the potential of attracting US $33 billion of investment in 10 years and generate employment of 9 million person-days. The food processing sector in India is clearly an attractive sector for investment and offers significant growth potential to investors.

Conclusion #

The industry needs to adopt the latest technolo- gies to inject greater efficiency which could provide economies of scale and cost effectiveness. We need to introduce technologies that can add value at a rea- sonable cost as the premium of processed foods over fresh fruits and vegetables cannot be very high if a large demand is to be generated. Some of the new technologies in cold storage system include chang- ing the cooling system, use of sandwich insulated panels, spraying potatoes with sprout suppressants and then storing them to save power and use vapor absorption refrigeration, based on solar and bio-gas energy which has been adopted in the advanced

countries. Similar innovations have already been applied in several other areas.

The other issue is the absence of linkages between the industry and the farmers for the raw materials. Currently, most agro industries depend on the normal trade channel for their raw material which often results in the industry getting only the left overs of the market. This is very acute in the horticulture-based industry. In order to ensure that the industry gets the right quality and quantity of raw material at the appropriate time, the most suitable method in the Indian context appears is to procure raw material directly from the farmers through contract product. Experiments made by some leading companies in this regard have been eminently successful.

India has large prospects for exports of agro-products. The key to India’s success, however, shall be quality. In our endeavor to boost exports, India may been confronted with two issues, viz., genuine quality issues and pseudo quality issues. We need to gear up to meet both the challenges. The concept of quality assurance has been alluded to the Indian exporters so far. Total quality man- agement begins not only from the first stage of manufacturing of the end product but from stage one of production of the raw material. Most of the processed food manufactured in the country is not of a very good quality, largely because of the use of poor raw material. Therefore, the processors need to enter into contracted arrangements with the farmers for providing processable varieties of raw materials and also help them to improve productivity by using the latest agricultural technologies.

The growth potential of India’s food industry is enormous. With food being a national priority and food habits changing rapidly towards value-added foods, the Indian food processing industry is on the brink of a revolution that will modernize the entire food chain.

SUPPLY CHAIN MANAGEMENT #

What is ‘food supply chain management’? #

‘Supply chain management’ is the term given to the system and inter-connections of organizations, people, activities, technologies, information and resources involved in production and distribution

of a food product. It encompasses many different disciplines and logistical steps from sourcing the right raw material and ingredients through to on-time delivery to the consumer. The supply chain can be quite complex when dealing with food products.

From “farm to fork” #

You may have heard such terms as “farm to fork” or “paddock to plate”. These terms refer to the supply chain within the food industry in an easy to visualize way.

Take a minute to imagine all of the people and organizations that might have been involved in getting your breakfast to you today. The growers and producers – wheat farmers if you had toast or weetabix, dairy farmers if you had milk or yogurt and even banana growers if you had banana chips in your muesli. Then there are the manufacturers who turn the wheat or bananas into a breakfast product. This usually involves several stages and several manufacturers.

For example, one company might dry the bananas into chips and then sell them to the muesli producers who then add them as a component to the finished breakfast product. The manufacturing can be done close to where the commodity crop is grown or it can be moved elsewhere for this, even exported to another country. Then there is the packaging com- pany who manufactured the packaging material to protect the product. Along the way distributors and transporters move the foods by road, rail, air or sea.

Once the product arrives at the destination, it goes into the shops or market place for selling. The shop can be a huge multi-national supermarket or a small outlet. The retailers promote the product to make consumers want to buy it through advertising and marketing strategies at both the point of sale and through advertising media, like newspapers and television channels. Finally, the customer buys the product, takes it home and consumes it. The supply chain is now completed.

However, this is not necessarily the final step in the life of the product – the post-consumer stage of waste disposal and management for all the food that goes uneaten. Approximately a quarter to a third of all the food we buy ends up thrown out, usually because we buy more perishable food than

we need or we serve more than we can eat. This is particularly true for fresh produce with a limited shelf life.

Elements of the supply chain #

The stages of the supply chain are now briefly outlined below in a simplified presentation. It can be far more complicated in reality with many inter-de- pendencies and steps.

Food Ingredients and raw materials #

The supply chain in the food industry starts with ingredients or raw materials. Selection of the appropriate raw materials is needed to achieve the desired end product. Suppliers are contracted to supply materials that meet the requirements outlined on the raw material specification sheet. There may be a number of concurrent suppliers of the same ingredient to ensure availability is always guaran- teed, especially for high volume businesses, such as in fast food restaurants.

A traceability system allows manufacturers to trace the source and path of each ingredient or raw material throughout the production process. This is very important if any incidences of contamination or allergens come to light after a product has been placed on the market. Having such safeguards in place can prevent or minimize any widespread risks to consumers.

Transport and storage

Unless you grow your own food, all the food we consume has undergone some – and probably many – forms of transport. In the simplest case, fresh vegetables may be taken to a local market. Consumers then buy produce and drive, walk or cycle it home. This first step may be eliminated if the produce is bought at the farm-gate, such as in the case of strawberries in the summer time, but then it is still transported home by the customer.

A product may be a key ingredient for another product and thus is transported to a manufacturing site elsewhere by road, rail, sea or air. This procedure can be repeated before it is finally sold as a finished product, which again requires transport to get it to the point of sale. Transportation of foods results in what it termed “food miles” and its economic and environmental impacts are debated today.

Commodity products, such as grains, can be bulk or container shipped around the world in huge transporter ships. In bulk shipping the grain goes straight into the hold of the ship instead of being transported in containers on board the ship. Some countries are major commodity exporters to other parts of the world, such as Australia and Canada for wheat export and pulses. Further on, we will see some examples of innovations and research in shipping transport.

The storage, packaging and transport steps of the supply chain can involve many technologies, needed to maintain product quality. Chilled or frozen distribution (“cold-chain”) and modified atmosphere environments are used for many products.

Foods can be stored and packed in modified or controlled atmospheres. Controlled atmospheres are useful for crops that ripen after harvest or deteriorate quickly even when stored optimally. The gas composition is carefully monitored and a proportion of the store atmosphere is re- circulated to control the carbon dioxide concentration. In mod- ified atmospheres however the product is held in an airtight environment and the atmosphere is changed by respiratory activity of the fresh foods. Carbon dioxide levels can be higher than 20% and oxygen levels can be as low as 0%. High CO2 levels are important for controlling insects and mould growth for example in grain storage.

Food Production #

Ingredients are combined or transformed in some way during the manufacturing stage to produce the final food product. Production can be thought of in terms of the input of raw materials that undergo a process of transformation to produce an output, the product. Commercial food products can have mul- tiple ingredients or components, which themselves may have undergone transformations, making them quite complex final products. Production can take many forms – it can be batch or continuous, on a mass-scale, or more limited in output – and can use many specialized techniques and equipment.

Packaging is added to the finished product. Packaging protects the food and provides the appro- priate barrier to maintain product safety, amongst other important roles. Individual packaged products

are then combined into larger consignments ready for distribution to sales points.

Safety in the supply chain #

Safety is vitally important in food production. The result of a supply chain should be a product that should be safe to eat. Manufacturers are forced by law to make sure of this. Risk assessment and hazard analysis schemes are used in industry to assess potential problems before they arise. As is true with other aspects of life, it is better to prevent a problem before it happens than to try to correct it afterwards.

Hazard Analysis    and   Critical   Control Points – HACCP #

The system such in food manufacturing is called Hazard Analysis and Critical Control Points or HACCP for short. Different foods carry different risks. A risk is the likelihood of a problem – or a hazard – occurring. Risk assessment in food pro- duction looks particularly at ingredients, times and temperatures, processing methods and packaging.

There are three type of hazards defined in food production:

• Biological – such as food poisoning due to bacterial contamination (e.g. salmonella), mould growth and viral infections.
• Chemical – such as that from cleaning fluids, fertilizers or paints.
• Physical – such as stones, hair, fingernails, rings and bits of machinery.

In order to make a HACCP plan, each stage of the production system is first described. Any risks associated with each stage are then identified with an explanation of why this particular problem poses a risk. The control check is then worked out to stop the hazard or reduce the likelihood of it happening. Finally an action plan is outlined to state what action is to be taken if the control check shows the hazard has happened. On top of this, it is essential that effective record keeping is maintained to document everything.

It is a good idea for the HACCP team to include people from across multi-disciplinary competencies, including food technologists, microbiologists, pack- aging technologists, etc.

Social and environmental concerns associated with the food supply chain #

In addition to safety, timeliness and general good management practices are necessary for a successful food supply chain. There is also growing concern around social and environmental issues associated with the food supply chain. Some of these are dis- cussed below.

In particular, ‘food provenance’ and ‘food miles’ have become important concerns as societies start to consider the wider implications of producing and moving food.

“Food provenance” refers to where the food has been grown or made, by whom, and how and when. Many companies have developed responsible or ethical trading policies in response to this issue. Some products carry the “fair trade” endorsement.

“Food miles” refers to the distance between where the food is grown and where it is eaten. Supermarkets today sell fresh fruit from South America and frozen meat from New Zealand – and everything in-between! Many food products contain ingredients or components that have traveled across the world and thus accrued many food miles.

Transporting food burns fuel and produces greenhouse gases, which in turn causes climate change. The CO2 produced during this process, is

referred to as the ‘carbon footprint’ – how big a

mark it makes on the environment. However, it is not as straightforward as just looking at the miles: if the alternative to shipping naturally-ripened fresh produce over thousands of kilometers is to produce it closer to home but in very energy-intensive greenhouses, is this better? It may be that there are carbon-neutral greenhouses powered by renewable

energy sources in the near future which go some way towards answering this.

In “Real insights” the public discussions at COP15 in Copenhagen on the impacts of food production and distribution on climate change are discussed.

On top of the environmental concerns, there is also the ethical question of taking away the livelihoods of farmers from poorer regions of the world who grow crops for export. This discussion falls into the concerns voiced by some groups about food sovereignty.

As with other consumer products in the world, food products and their manufacturers are now coming under closer scrutiny for their own carbon footprint. In the future, food products may carry “climate-labels” but this is still generally very much under discussion.

Of course, the alternative to foods carrying a high food mileage or intensive production practices, is to buy locally produced products that are in season. Local markets usually sell food that has been locally grown. (What is “local” is often down to sensible interpretations by individuals – from the same village or county or further afield?)

Organic products are also increasing in popular- ity and generally use less inputs (energy, fertilizer, etc) in their production compared to conventional farming methods but may have traveled across the world. On-line shopping has now opened up the pos- sibility for markets and customers to be anywhere.

This just shows how complex the food supply chain can be with the added dimension of current debate about climate change impacts.