Vast potential seen in processed food and agro-based business

Vast potential seen in processed food and agro-based business

India has tremendous potential to emerge as a major player in the international processed food markets and other agro-based business provided the country’s industrialists and farmers are actively supported in their endeavors by appropriate government policies.

Today, India is the world’s highest producer of milk, the second largest grower of fruits and vegetables, the second largest producer of wheat, rice, groundnuts and sugarcane, the third largest producer of coconuts and the seventh largest nation in terms of marine holdings. Furthermore, the country is blessed with diverse agro-climatic zones that produce almost all species of food, horticulture and cash crops, which can be easily transformed into hard cash. Despite all these advantages, India’s food processing industry, which could have been the spine of an agricultural economy, has not yet tapped its vast potential.

To put it rightly, the Indian food processing industry is still in its infancy. This can be gauged from the fact that the total exports of processed foods from the country are only a lean 0.5% of the entire global trade. Only 12% of agricultural raw materials and less than 10% of the annual fruits and vegetables production are processed. The percentage is as high as 70 in Brazil and the US, 78 in Philippines and 83 in Malaysia.

Another statistics show that every year 18 per cent of the fruits and vegetables valued at Rs 13,300 crore is being wasted due to poor harvesting, storage, transportation and post-harvest processing. Inadequate storage alone destroys 20% of the total food grains output.

The result is low capacity utilization, non-availability of quality raw materials and uneconomic operating sizes coupled with other problems. This is not only a criminal waste and an intolerable state of affairs; it is also dangerous for the future growth of India’s agricultural sector.

Unfortunately, the reform process and liberalization measures pursued since 1991 by the successive governments in India have so far failed to benefit or percolate to the millions of hectares of farmlands, orchards and water stretches across the country. So they have not only been neglected as low technology areas, but have also remained immune to the winds of change sweeping the industrial sectors and urban heartlands of India. 

This has led to falling marginal incomes in agriculture because of lack of required infrastructure and market linkages for farm produce and stagnant opportunities in the agro and food processing sector. 

However, among the large nations of the world, India is one of the most fortunate in that it has the climate, the land and the people to grow more of almost anything. People are now conscious that in India’s rural areas, away from the urban centers, there is vast potential to make a great deal of money. So the central and state governments should make concrete and planned efforts to revive the agriculture and allied sectors across the country with the aim of providing remunerative livelihood to the farmers. As such, the following steps need to be taken to accelerate the growth of this sector:

Investments in the sector should be monitored and steps should be taken by the states to attract investments in rural areas, close to the raw material sources so as to help in reduction of post-harvest losses and thereby provide better returns to the farmers.

Contract farming should be encouraged. Besides, the present Land Ceiling Act prevents companies from setting up their own farms. As land is a state subject, the Centre cannot intervene. This matter has to be looked into and solved amicably.

The Indian food processing industry has been surviving on the same technology levels for a long time now. Hence, most of the products cannot compete in the global market because of poor product quality and production economies. Upgradation of technology, therefore, becomes essential.  

An export enhancement plan would require setting up marketing and warehousing facilities overseas and combining it with the necessary packaging facilities. This will enable exporters to ship their products in bulk with the packaging done over there at cheaper rates. For this to be effective, tie-ups with multinationals should be explored.

Developing and actively pursuing a policy to industrialize the agricultural sector and making it an essential element of the market economy, besides building assets for the nation, can also stop the disturbing migration of the rural population to the urban areas. A well-developed agro-based industry will not only put food in the people’s stomachs, but also money in their pockets without having to shift their base.

Thus, possibilities and prospects for the farmers as well as the agro and food processing units are immense both in the domestic market and in the international market. Innumerable new and lucrative projects in fruits to sea foods to bio-engineered food products can be set up and promoted if the state and central government policies are fine-tuned and made more conducive for the growth and development of the agro and food processing sector. And the already existing companies in this sector can profitably expand their operations and foray into new global markets with their edible brands and they can successfully establish a high-profile presence internationally.

This will not only enable India to take a quantum leap in its export earnings, but also provide new opportunities to farmers, thereby spreading growth and prosperity evenly throughout the villages across the country. And then, maybe Mahatma Gandhi’s dream may come true – perhaps, not exactly, the way he would have done it!

[Suresh R Menon is the Consulting Editor of Business Digest. He has worked in senior editorial positions with various publications, including the Business Standard, The Times of India, Asian Age, Indian Post, Dalal Street Journal, New Global Indian and The Gulf Today. He can be contacted via email at sureshmenon@hotmail.com]