Ministry of Food Process Industries

1. Ministry of Food Process Industries THE SUNRISE SECTOR

2. GOALS / OBJECTIVES OF MFPI Promotion of FPIs resulting in :- • Reduction in wastages • Value / quality addition • Employment generation • Remunerative income for farmers

3. STATUS OF FOOD PROCESSING INDUSTRIES • Size of food market in India - Rs. 8,60,000 Crores • Primarily processed food market – Rs. 2,80,000 crore • Value added processed food market – Rs. 1,80,000 crore • Investment during the 10th plan is estimated at Rs. 62,105 Crores • Industry growth rate during the last five years is estimated at 7.14% against GDP of 6.2% • Investment required during next ten years – Rs. 1,10,000 crore

4. Status of Food Processing Industry • Low level of processing – • 2% in the case of fruits and vegetables • 14%in milk • 4% in fisheries • 1% in meat and poultry products • India’s share in world’s processed food production-1% • Value addition 20% against 45% in Philippines

5. Status of Food Processing Industry • India’s share in global agricultural export is 1.6% of $520 billion • Exports have stagnated during the last five years • Unorganised marketing and distribution of food items • 72% of food consumption in the world is through organised set up whereas it is 1% in India • Fragmented retailing results in high cost due to inefficiency ,wastage • Estimated wastage fruits & vegetables in India-35%

6. Processing of Fruits and Vegetables

7. Why increased focus on Food processing? • The second Green Revolution will be centered around the concept of ‘farm to plate’. • Low share of processed foods in the country will open doors to other countries to tap the emerging market for processed food triggered by a burgeoning middle class with increased purchasing power.  

8. Why increased focus on Agro-processing? •  The Horticulture Mission targets to increase the production of fruits and vegetables to 260MT from the current 140 MT through several interventions. • The current wastage is 35% in fruits and vegetables a and in certain cases as high as 60%

9. Why increased focus on Agro-processing? • Vision 2015 of Govt of India is to raise agro/food processing from 6% to 20%, value addition from 20% to 35% and the global trade from 1.5% to 3 % . • The estimated requirement of funds for achieving this being Rs.100,000 Crore. (source-GOI)

10. Reasons for Sub Optimal Growth of Food Processing • Lack of infrastructure • Inadequate investment • Agricultural development programmes focused generally on production • Post harvest handling including agri/food processing was not a priority agenda under agricultural extension • Lack of access to world class technology • Lack of processing varieties

11. Reasons for Sub Optimal Growth of Food Processing • APMC Act , high taxation etc did not offer incentives for investment • Multiplicity of agencies-absence of single window service • Fragmented schemes • 70% of food processing sector dominated by small scale and unorganised sector • Limited access to credit • Absence of an efficient supply chain

12. Supply Chain in Food Processing – Weak Link • Production sector unorganised • Bulk of production in small & marginal holdings • Producers getting only 30 % of produce value • Trade intermediaries getting rest 70 % without any value addition • Supply line unreliable • Lack of infrastructure at the production sites • Absence of credible institutions to streamline supply chain • Producers not linked to the processors

13. ROLE OF MFPI • Policy support • FPI sector delicensed except alcoholic beverages • Excise duty waived on F&VP (from 2000 – 01) • Income tax holiday for F&VP (from 2004 – 05) • Customs duty reduced on freezer van from 20 to 10% (from 2005 – 06) • Contd

14. Budget 2006-07 Announcements • Food Processing identified as industry with employment potential • Food Processing to be a priority sector for bank credit • NABARD- a refinancing window corpus of Rs 1,000 crore • for agro processing infrastructure and market development • NIFTEM to be setup; Paddy Processing Research Center • Thanjavur a National level institute • 4. Rs 150 Crore earmarked for NHM for terminal markets

15. Continued… • 5. Custom Duty on packaging machines to be reduced from • 15 % to 5% • Excise on condensed milk ,icecream, preparation of • meat,fish & poultry ,pectins,pasta and yeast to be • fully exempt • 7. Excise on ready-to-eat packaged foods and instant food • mixes like dosa & idli mixes reduced from 16% to 8 % • 8. Excise on aerated drinks has reduced from 24 % to 16% • 9. Excise on packaging paper reduced from 16% to 12% • 10. Custom Duty on Vanaspati increased to 80%

16. Major initiatives of last two years • Vision Document release April 2005 • GOM on Vision strategy & Action Plan • Food Safety & Standard Bill 2005 • NIFTEM Cleared by EFC • PPRC under progress • Expenditure by Ministry picking up 60 crores, 80 crores • 119 crores in 06-07 .

17. (d) Developmental / financial support under various schemes under 10th Plan:- • Scheme for infrastructure development • Scheme of technology upgradation / establishment / • modernization of food processing industries. • Scheme for human resource development • Schemes for quality assurance, R&D, codex, bar coding • and establishment of labs.

18. MoFPI Schemes

19. MoFPI Schemes

20. Gaps in the Present Scheme • The schemes mentioned are basically stand alone, though these are all components of food processing • Lack of integration leads to under utilization of infrastructure created • Case in point is that of cold storage (in spite of huge wastages the cold storage facilities are under utilised) • Duplication/overlapping of schemes • Financial support inadequate for attracting investment in a sector which has to deal with several uncertainties

21. Gaps in the Present Scheme.. • Lack of comprehensive project appraisal ensuring backward and forward linkages • Lack of stakeholder participation

22. Gaps in the Present Scheme • Food park • Formulated like other industrial parks-supply driven • Not pre-marketed • Not location specific • Absence of backward linkages • Inadequate financial assistance - Rs.4 Crore does not commensurate with the investment • Insistence of a minimum number of 20 units will not attract medium and big investors Contd…

23. Gaps in the Present Scheme • Food park • Modification during the Tenth Plan insisting on investors’ share of 75% made it more rigid • Lack of a sustainable management arrangement from it’s inception to commissioning • No arrangements to harness resources available else where for complementary activities and channelise to the project to make it more viable

24. Current Status of Food Parks • So far 51 Food Parks approved under the scheme • Most of them are yet to be commissioned • Those commissioned facing issues of capacity utilisation • Low level of occupancy in the park

25. Existing scheme Targeting small & medium enterprises with a minimum of 20 units for a 30 acre park Activities confined to Park alone No stake holder participation Inadequate financial assistance-25% or Rs.4 Crores per park Suggested framework May not restrict the number of units-restriction can be on the quantity of material to be handled Complementary activities can take place outside the Park To be implemented on a PPP format SPV to manage the park 51% equity in the SPV to be with private entrepreneurs Financial assistance to be 50% subject to maximum of Rs.50 Crores per park Approach to Agro/food Parks: Comparison

26. Existing scheme Supply driven Posr marketed Stand-alone (no backward and forward linkages) No project development agency No financial closure Suggested framework Demand driven Pre-marketed Strong ’backward & forward integration and sustainable supply chain management Project manager (to handhold from concept to commission) Financial closure Approach to Agro/food Parks: Comparison

27. Proposed Scheme • Features • Objective • Build common infrastructure – Weigh Bridge,Pack House, Cold Storage, Cold Chain, Irradiation facilities,Marketing infrastructure, common facilities and management service centre, etc., • R&D support, Quality Control and certification infrastructure • Ensure backward and forward linkages • Implementation strategy • Facilitate convergence of services • Scheme to be in PPP mode • To be operated by SPV • Involve stakeholders (GoI, State Govts, Entrepreneurs, Farmers) • Facilitated by Project Management Agency (PMA)

28. The Way Forward • The integrated food parks to be set up in a minimum area of about 75 acres –150 acres (need not be restricted by geographical boundaries) • The basic infrastructure cost , investment for common facilities, infrastructure at collection points etc will amount to Rs 45 to 100 crore

29. The Way Forward • There should be no restriction on the number of units-emphasis should be on economic viability • Efforts to be directed for supply chain vendor development involving farmers organisations –this helps to benefit a large number of farmers besides facilitating creation of basic infrastructure in rural areas

30. Why Cluster Based Approach? • Offers critical mass for customization of interventions • Economies of scale in operation • Better access to technology, information • Greater access to customers, channels and better value realisation • Cheaper access to inputs, raw materials

31. Methodology Handholding from “concept to commissioning” Concept NeedAssessment Capacity Building Project Development Project Financing Project Execution Commissioning

32. Model Structure of SPV State Govt/ State agencies PMA Government of India State support under identified schemes Project Management ConsultantAgency Support under identified. Schemes Shareholders Lenders SPV Shareholders Agreements Financing Agreements Contracts for technical studies/ services Service /Supply Agreements Construction/ O&M Contract Construction agencies User Units Consultants

33. STATES INITIATIVES REQUESTED • Amendment to APMC Acts • Lowering of VAT rates • Intergrate promotional infrastructure

34. Project profile Model Food Park

35. Ideal Park Layout- Two Parallel Lines • First line: fresh food market • Primary processing of fruits and vegetables • Sorting, grading, cleaning and packing by adopting modern technology • Aimed at increasing the shelf-life by 7-10 days • Facilitating access of products to all the major markets • Increasing value realization for the producers

36. Ideal Park Layout- Two Parallel Lines • Second line: processed food market • Units engaged in secondary processing • Producing products like ready to eat vegetables, juice, jam, jelly, pickles, paste ,wine etc • Raw materials from the first line of units as well as direct sourcing of appropriate varieties • Product range can be expanded based on the location • A separate area for meat products/fisheries /diary can be earmarked on a need basis

37. Supply Chain Management - Strategy …. Collection Yard-1 Primary processing units Sorting Grading Cleaning Fresh food supermarket Collection Yard-2 Packing Collection Yard-3 Secondary processing units Collection Yard-4 Jam/ jelly Juice Paste pickles Processed food supermarket

38. Proposed Common Facilities - Production • Weigh Bridge • Pack House • Cold Storage • Food Testing & Analysis Lab • Product-cum-Display Centre

39. Modernisation of Abattoirs • Largest livestock population (485 mm) • Market potential of INR 200 bn • 3000 Slaughter Houses & 255 licenced units • Lack of infrastructure • 100 cities to be targeted for modernisation • Constitution of Meat Board

41. Business Development Programme for Street Food Vendors

42. Background • Street vending is an important economic activity in the informal economy • It has to be accepted that street food vending is a reality and it impacts the livelihood of a large number of people • Beneficiaries of street vending,besides the vendor’s themselves, are the low income group customers • A host of problems confront this segment ranging from food safety to social and legal issues

43. Street vendors in some cities

44. Bringing street vendors to mainstream –short term intervention • Sensitisation of the local bodies • Capacity building among all stake holders Training on health and hygiene standards • Financial support for infrastructure • Establish simple standards for safety and hygiene • Involve NGOs and other civic bodies

45. Opportunities • Can be a major income generating activity for land less • A sizeable portion of low income people can have access to safe food • Can be linked to tourism and promote ethnic food items • Can be a vocation for women with reduced drudgery

46. The way forward • Implement a pilot scheme covering 10 cities • Work shop on the theme to be conducted for street vendor’s association • Identify areas with in the city which has potential for street food vending –to be done through a consultation process • Evolve food sanitation standards for street food • Certification agencies including non governmental to be identified

47. The way forward • Identify vendors with preference to women • Form SHGs wherever feasible • Training the selected vendors with the active involvement of vendor’s association and local administration • Issue a permit in the name of the vendor with a provision of an alternate member also • Provide designed carts free of cost to the vendor’s in the cities selected

48. The way forward • At least 1000 carts per city to be given to provide an impact • In 15 cities 15,000 carts to be supplied • Approximate expenditure –Rs.30 Crore • Evolving standards,Training and capacity building-Rs.1.5 Crore • The implementation process from a baseline survey ,capacity building ,evolving standards,distribution of carts etc would require a professional project manager

49. THANK YOU