Answer: 

Introduction:

The food processing industry encompasses a wide range of activities, including the processing, preservation, packaging, and distribution of food products. The food processing industry in India plays a vital role in the country’s economy and is an important contributor to the growth and development of the agriculture sector.

Body:

Opportunities in the food processing sector:

• Quantity of raw material available: India has 52% cultivable land, compared to 11% world average. It has the largest livestock population, 17% of Global milk share (largest) and is the 2nd largest producer of Fisheries, Fruits & Vegetables, Cereals, etc.
• High-yield Varieties (HYV) of Food: High-yield varieties (HYV) of food like horticulture, dairy, etc have low shelf life. This is where FPI can come into play and subsequently increase farmers’ income.
• Diversity: India has a variety of raw materials available which can help develop a host of innovative food products from the diverse raw materials.
• Expansion potential: India currently processes only 10% of its food material, compared to the US at 65% and China at 23%. India also has a cheap workforce which can be upskilled as necessary.
• Ensuring Nutritional Security: Processed foods when fortified with vitamins and minerals can reduce the nutritional gap in the population.
• Large Consumption Economy: With rising incomes and standard of living, demand for items immediately available to eat or cook and safe processed food
• High value addition: The 10% of processed food in India is 1/3 of the total food market by value.
• Government support: Government has taken various steps for the promotion of FPIs such as up to 100% FDI under the automatic route, incentives under PM Krishi Sampada Yojana, Mega Food Parks scheme and PLI in the FPI sector in India.

Challenges in food processing industry:

• Poor supply chain linkage: Lack of mechanization, high seasonality, perishability, and lack of proper intermediation (supply chain) results in a lack of availability of raw material. Due to inadequate infrastructure, more than 30% of the produce from the farm gate is lost.
• Infrastructure bottlenecks: FPIs need world class infrastructure and logistics support in order to reduce wastage. This would require support from Railways as well as Airways.
• Unskilled manpower: The existing manpower in the farming industry needs to be trained in order to be employable in the FPI sector.
• Quality adherence low: Neither the crops nor the finished food is graded according to the quality. This poses a challenge as high-quality processed food in other markets act as competitors against the low-quality product. This limits export potential.
• Low level of processing in certain sectors: Sectors like Fisheries (8%), Poultry (6%), Horticulture food (2%), Consumer foods & Grains have low processing infrastructure. These sectors also show seasonality of operations and low-capacity utilisations.
• Not having enough product development and innovation.
• Deficiencies in the Regulatory Environment: There are numerous laws, under the jurisdiction of different ministries and departments, which govern food safety and packaging.

Increasing income of the farmer through food processing:

• Employment: It can contribute to employment generation. Agriculture already has a problem of disguised unemployment and seasonal employment. More than 10 lakh new jobs are anticipated to be created in the food processing industry.
• Establishing skilled manpower: It would lead to on job skilling of thousands of workers in India, helping in creating a vibrant labour market for the sector.
• Profit for farmers: It can provide an alternative profitable market to farmers that can contribute to doubling the farmers income. It leads to reduced wastage and better utilization of agricultural produce by value addition.
• Creation of Supply Chains: with regular demand for raw material as well as processed goods, a stable supply chain is expected.
• Private investment: Agriculture has negligible private investment in India, Food processing industry can act as an avenue for private investment. With large scale production economies of scale would set in, benefitting in the long run.

Conclusion:

Food processing provides an opportunity to utilize excess production efficiently, ensuring food & nutritional security and supporting farmers. India being an agrarian dominated country must leverage its potential in the Food Processing Industry.

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