AGRO PROCESSING- THE NEXT FRONTIER

COMPILED BY NIMISH SHAH, VIBHA SAHU & KAVITA BAEET

Agenda

1. Meaning & Introduction2. Significance & Importance3. Current Status4. Shortcomings5. Growth Prospects6. Changing Socio Economic Environment7. Government Policies8. Credit & Finance9. Infrastructure Development10.Public-Private Partnership11.Introduction of Supporting Institutions12.Liberalization of Controls & Regulation13.SWOT Analysis14.Plan & Strategy15.Goal 201516.Areas of Development17.Conclusion

Meaning & Introduction

Agro processing is defined as “Subset of manufacturing that processes raw materials and intermediate products derived from the agricultural sector”.

Transforming products originating from agriculture, forestry and fisheries.

All operations from the stage of harvest till the material reaches the end users in the desired form, packaging, quantity, quality and price.

Undergoing rapid transformation. Strong macro-economic fundamentals and the changing socio-economic scene are driving what was once a traditional, small-scale processed food production system into a modern industry

Evolved from traditional subsistence level farming to commercial agriculture producing high value and processed products.

Recognized as a 'sunrise industry' with a vision to make India the Food Basket of the world, achieve what has been achieved in the field of computer technology.

52% of total land is cultivable as against 11% which is the world average.

Largest gross cropped area (160 mn hectares )

Leading producer of cereal crops, pulses, tea, jute and allied fibers and fruits & vegetables.

Second largest livestock population in the world &Largest producer of milk in the world. In fact, India accounts for 17% of the animals, 12% of the plants (including over 10,000 species of aromatic and medicinal plants) and 10% of fish genetic resources of the world.

India has nearly 46 soil types out of 60 different soil type available in the world.

Significance & ImportanceIndia occupies a dominant position in world agriculture -

Current Status

India is a one of the leading producer of agricultural and livestock commodities, however India’s share in world trade of processed food is 1.6%, and value addition is 20%.

India's gross cropped area of 160 mn hectares nearly equals the size of US farmland and is larger than that of Europe and China.

40% this land being irrigated.

It is estimated that a 1% increase in irrigated area generates a 1.6% increase in crop output and a RoI of 17%. Realizing this, the Indian government has been making a concerted effort to increase gross cropped area under irrigation.

India's share in international food trade is negligible less than 1.5% share of global agritrade.

Socio Economic Environment and Demand for Processed Foods & Unorganized Processing industry.

Poor Linkages between Public & Private sector.

Policy Issues in Food Processing (APMC ACT, Commodities Act, Taxes, Credit)

Traditional and Subsistence Farming, Market Linkages & Infrastructure.

Unorganized Agricultural Sector small farms (in all 100 million, with farm size of less than 1.2 hectares divided into 3-10 separate plots), which constrains productivity levels or yield per hectare.

Long value change leads to Cost differential between the mandi & the market price to 60-100%

Value of wastages is at over Rs50,000 crore

Shortcomings

Growth Prospects

Changes in Socio Economic Environment.

Changes in Policy Environment

Credit & Finance

Infrastructure Development

Introduction of Supporting Institutions

Initiatives in Public Private Partnership Mode

Changes in Controls & Regulations.

Tax exemptions for exports, processing and imports of processing technology.

• Increased Urbanisation

• Higher incomes with increasing population of working women's.

• Increasing Nuclear Families leading to more demand for processed food.

• Higher consumer awareness on processed food

Changing Socio Environment

Changes in Government Policies

Most states prohibits transactions outside the regulated mandis.

Do not facilitate procurement of agricultural produce directly from farmer’s fields

Most states does not encourage direct marketing and Contract Farming

Do not allow investment by the private sector for improving the infrastructure

The purchaser has to be a registered agent at the wholesale market (Commission Agent).

No compulsion to sell through existing markets administered by the APMC .

Enables procurement of agricultural produce from the Farm Gate

Enables Contract Farming & Provision made for direct sale of farm produce.

Encourage private sector investment in the area of agriculture.

APMC ACT MODEL ACT

Credit & Finance

• v

The Union Budget for financial year 2006-07 was the first Union Budget that had focused attention on food processing and food technology. Key measures undertaken included

1. Decision to treat the food processing sector as a priority sector for bank credit

1. Creating of separate window with a corpus of Rs. 1000 crore to NABARD for refinancing loans

Infrastructure Development

Value Added Centres

Packaging CentreModernised Abattoirs

Food Parks

Public Private Partnership

Major Infrastructure Development Projects are part of PPP initiative.

• Modern Terminal Markets• Development of Abattoirs• Food Parks

Introduction of Supporting Institutions

• 1986- Agriculture & Processed Food Products Export Development Authority (APEDA) initiated to develop agricultural commodities & processed foods and their export.

• Agri- Clinics & Agri Business Centers – In association with NABARD launched programmes to enhance the reach of modern farming technologies to farmers across country.

• National Institute of Food Technology Entrepreneurship (NIFTEM) – Objective is development of world class food technologists, creation of Entrepreneurs and Managers in the food Industry.

• 1994- Small Farmers Agri Business Consortiums (SFAC) – Objective to set up an autonomous body for the production and development of small farmers agri business activities.

Controls & Regulations

• 100% Foreign Direct Investment

• No Industrial License required for all food and agro processing Industries

• Liberal export/ Import except for items on negative list

SWOT ANALYSIS OF AGRO-PROCESSINGINDUSTRY INFRASTRUCTURE IN INDIA

PLAN AND STRATEGY

The objectives of agro-processing programmes in India should be

Minimize product losses

Add maximum value

Achieve high quality standards

Keep processing cost low

Ensure that a fair share of added value goes to theproducer

Goal 2015

Ministry of Food Processing Industries had commissioned a Vision document for the growth of FPI sector.

Aim to increase processing of perishables 20%

Increase value addition from the present level of 20% to 34%

Share in global trade up from 1.6% to 3%

Areas Of Development

Inclusion of small Farmers in modern Value chains.

Small and Micro Enterprise Linkage with Modern agribusinesses.

Regionally balanced growth

Ensure effective implementation of the plans and schemes proposed.

On the policy front, strong regulatory framework for managing contracts with farmers is important.

conclusion

Agro processing industry is widely recognized as a 'sunrise industry' in India having huge potential for uplifting agricultural economy by exposing traditional Indian agriculture to modern technologies, creating large scale processed food manufacturing and food chain facilities and consequently generate employment and export earnings.

Thank you!!