With the shift in consumer needs, a rapid evolution in the global food landscape can be witnessed. Hectic schedules have made ready-to-cook (RTC) and ready-to-eat (RTE) food a new favourite among the younger generation.
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There is an increasing demand for processed and convenience food. However, the supply side has failed to keep up with the demand. The imparity between the current demand and supply offers immense scope for the manufacturers, retailers and suppliers of processed food.
Abounding India
India is one of the largest producers of food grains besides being second in the world in the production of fruits and vegetables, and first in milk production and livestock population, which makes this sector further attractive. India is said to have 52 per cent cultivable land as against the world average of 11 per cent. It has 15 major climates of the world and has 46 out of 60 types of soil, making it the number one contender for becoming a global sourcing hub.
Currently of the total production, only 2.2 per cent of fruits and vegetables (F&V), 26 per cent of marine, 6 per cent of poultry, 20 per cent of buffalo meat and 35 per cent of milk is processed. This is quite low in comparison to the food processed in developed countries.
While, some part of the produce is consumed raw and unprocessed, a large part rots in the warehouses in absence of proper transporting system, terminal markets, distribution channels, etc. “As much as 30-40 per cent of the total F&V production is wasted every year. The way out is food processing. Increased food processing can lead to minimal wastage,” says K L Radhakrishnan, chief editor, Association of Indian Food Processing Entrepreneurs (AIFPA).
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Where we stand
India's position in the global export of agricultural food was a distant 21st for the year 2007, with a share of 1.6 per cent. But the figures are transforming substantially as the export of processed food and beverages is growing steadfastly.
The Ministry of Food Processing Industries (MoFPI) aims to increase India’s share in the global processed food trade to 3 per cent in the next eight years.
As per estimates, the Food Processing Industry (FPI) ranks fifth in size in the country, representing over six percent of GDP. It accounts for around 13 percent of the country’s exports, 6 percent of total industrial investment and approximately 12-15 percent of manufacturing GDP.
Currently, the Indian Processed Food market is estimated to be USD 121 billion. And with the market growing at 10 per cent per annum, it is expected to reach USD 194 billion by 2015.
| Growth Drivers of the Sector |
| - Increasing Urbanisation - Increasing Nuclear Families and Working Women - Increased disposable incomes - Organised Retail and Private Label Penetration - Demand for Functional Food - Increased spend on health food |
Opportunity in FP
The sheer magnitude of the figures indicates the vast opportunity that lies ahead for entrepreneurs in this space. Especially for SME entrepreneurs as organized players remain at the fringe of this market accounting for close to only a third of the country’s total agri-processed products. A large part of the market is dominated by unorganised and small scale sectors.
The opportunities are ample in sectors like bakery, convenience food, snack, etc. Rohit Bhattiani, Principal Consultant at TechnoPak Advisors says, “The sector provides a number of opportunities for Indian entrepreneurs that include areas like bakery, convenience foods, snacks and savories etc.”
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Of the two segments of the Indian food processing industry— commodity-based processing and value-added processing, the former contributes to two thirds of the processed food market. And although the latter comprises a smaller segment of the market, it is experiencing a radical growth. In fact, India is moving towards convenience-foods that evolve through value added processing.
Value-added Processing, the new future
Currently, the demand and consumption of commodity-based processed products is higher. However, this trend is expected to change significantly on account of changing life-styles and increasing income levels. The change will soon become more prominent in urban India with an increased demand for value-added products, particularly in dairy, poultry, F&V, etc.
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| “The estimated growth figures of the FPI look positive. It is the best time to enter the industry and take India to newer heights in the processing sector.” - Shri Subodh Kant Sahai
Minister of Food Processing Industries |
As far as the industry prediction goes, the value-added processing segment is expected to grow with a CAGR of 12 per cent. And as projected, the top sectors with a high percentage growth will be RTE/RTC, F&V, non-vegetarian foods etc.
Government InitiativesThe Government of India is constantly trying to promote this industry as it promises significant employment and trade potential. The MoFPI has introduced several supportive policies and schemes to lure entrepreneurs into entering the areas of processing, supply chain management, financing, cold-storages, retailing and exports. It allows rebates and subsidies for infrastructure development, technology upgradation, quality control and human resource and institutional development in this sector.
The Ministry extends financial assistance in the form of grant-in-aid at 25 per cent of the cost of plant and machinery and technical civil works subject to a maximum of Rs 50 lakhs in general areas or 33.33 per cent subject to a maximum of Rs 75 lakhs in difficult areas under the scheme of setting up/ modernization/ expansion of food processing industries.
Take the Leap
As the figures indicate, there could never be a better time to take the leap but now. The industry promises exponential growth in the years to come.
The Minister of Food Processing Industries Shri Subodh Kant Sahai says “The estimated growth figures of the FPI look positive. It is the best time to enter the industry and take India to newer heights in the processing sector.”
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written by malav desai, July 20, 2011
written by links of london charms, March 18, 2011
written by VIMAL GROVER, March 09, 2011
VIMAL GROVER
09216131777
vimgrove@hotmail.com
written by dr.sridhar.k.k., March 09, 2011
Thanking you
yours truly
dr.sridhar.k.k.
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I am Prasad Hegde.I want to know that where can I get training and financial assistance for establishing an industry for food processing. Please send me details relating to the same.
Rgrds
Prasad Hegde