Trade Analytics

Farm to Fork - a Fresh Paradigm

September 20, 2018


As India makes major strides in setting up food processing infrastructure, the agriculture sector is expected to unlock unprecedented value in the coming future.


solar-energyThe history of farming in India dates back thousands of years and the country still retains a dominant position in global agri-trade. Diverse agro-climatic conditions in India are suitable for cultivation of a wide variety of agricultural produce. The country has an arable land of around 1.75 million square km1, which accounts for 58.8% of India’s total land area2.


India is one of the largest producers of food products in the world. It is the second largest producer of rice, wheat, fruits and vegetables (source: APEDA). Food grain production stood at 279.51 Mt Ton in 2017-18 compared to an average of 255.59 Mt ton between 2010 and 20153. The country is also a leading exporter, with exports of agricultural and processed food products reaching US$ 18.57 billion in 2017-18, a growth of 14.7% year-on-year in value terms4.


The availability of a rich agricultural resource base as well as a rapidly evolving domestic market are fuelling unprecedented growth in India’s food processing industry. India’s per capita income has steadily increased, with average per capita net national income (NNI) at Rs 79,882 during 2014-15 to 2017-18 as compared to Rs 67,594 during 2011-12 to 2014-155. Growing incomes and changing lifestyles have led to a steady transformation in the dietary habits of Indians from the traditional food grains and pulses to other categories like fruits and vegetables, dairy products, meat and edible oils, necessitating a major overhaul in the entire value chain from the farm to the kitchen table. Moreover, with typically hectic urban lifestyles, working couples and smaller families, there is a discernible shift to packaged foods; a segment projected to grow by five times in India to reach US$ 200 billion over the coming decade according to Credit Suisse6.



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Source: http://pib.nic.in/newsite/PrintRelease.aspx?relid=168879


A report published by the Ministry of Food Processing Industries, Ernst & Young and the CII projects that the food and beverage segment is expected to reach a value of US$ 1.142 trillion by 2025. This implies a potential size of US$ 958 billion for the Indian food processing industry at market prices by that year7. With improving interconnectivity and sustained efforts by stakeholders, India is also exploring avenues for growing its exports of processed food products. Exports of processed fruits and vegetables reached US$ 1.21 billion in 2017-18. Apart from this category, some major processed food items exported from India include cereal preparations, groundnuts, guar gum, cocoa products, etc (source: APEDA).


India’s current overall level of food processing is just 10%8, which needs to be rapidly increased to capture market opportunities and improve outcomes for farmers. In 2016, the Government of India permitted FDI up to 100% in the food processing industry via the automatic route.  In addition, 100% FDI is also allowed under Government route for retail trading including e-commerce, for food products manufactured and/or produced in India. With the introduction of the policy, India immediately witnessed a strong jump in FDI for food processing by 43% year-on-year to reach US$ 727.22 million in 2016-179 and further by 24% year-on-year to reach US$ 905 million in 2017-1810. The sector has received cumulative FDI inflows of US$ 8.45 billion from April 2000 to March 201811. Among other investments, global e-commerce major Amazon secured approval for investment of US$ 500 million for food retailing in the country in July 2017. World Food India, a platform to showcase opportunities across the fold value chain in India, was organised by Ministry of Food Processing Industries during November 3-5, 2017. During the event, around US$ 14 billion worth of MoUs were signed/exchanged/announced. Among the major countries that signed MoUs were USA, France, Germany, Netherlands and the UAE12.


To give a strong push to the setting up of food processing infrastructure, the Pradhan Mantri Kisan Sampada Yojana was launched in May 2017, with a planned outlay of Rs 6,000 crore13. Key focus areas include development of Mega Food Parks, integrated cold chain and value addition infrastructure, agro-processing clusters, food preservation and processing capacities, food testing laboratories and backward & forward linkages. Between 2014 and 2018, 13 Mega Food Parks have become operational, benefitting 20,725 farmers and generating employment for 334,854 people14; and 27 more are under implementation. During the same period, 85 cold chain projects have been operationalised with capacity addition for cold storage recorded at 2.76 lakh MT15.


FOOD PROCESSING CAPACITY CREATION (2014-18)

Number of Mega Food Parks completed

13

Preservation and Processing Capacity in Mega Food Parks

14.07 lakh MT

Cold Storage Capacity

72,750

Number of Cold Chain Projects operationalised

85

Capacity addition for cold storage

2.76 lakh MT

Quantity of agro-produce processed and preserved

30,37,000 MT

Value of agri-produce handled

Rs 7,593 crore

Source: Ministry of Food Processing Industries


Even as the share of manufacturing and services in the Indian economy grows, agriculture still accounts for around 49% share in employment16. ‘Promotion of value addition through food processing’ is a major plank of the seven-point strategy outlined by the Hon’ble Prime Minister to double the income of farmers by 202217. Rapid advancements in food processing infrastructure will be of immense benefit to Indian farmers in the coming years – it will help them prevent wastage, promote value addition and ensure that they get remunerative prices for their produce and tide over the vagaries of demand and supply. Moreover improvements in food quality and value addition will open many more avenues for producers in domestic as well as in export markets.


References:


1 - https://data.worldbank.org/indicator/AG.LND.AGRI.K2

2 - https://data.worldbank.org/indicator/AG.LND.AGRI.ZS

3 - Ministry of Agriculture and Farmer’s Welfare, Government of India, www.agriculture.gov.in

4 - http://agriexchange.apeda.gov.in/indexp/exportstatement.aspx

5 - https://www.livemint.com/Politics/DOgyp5BAbdMnCWht0wlFmO/Indias-per-capita-income-in-last-4-years-higher-at--80000.html

6 – https://www.bloombergquint.com/business/2018/05/02/why-indias-packaged-food-market-will-jump-to-200-billion-in-a-decade#gs.FarNdAo

7 - https://foodprocessingindia.co.in/pdf/FDI.pdf  

8, 13, 14, 15 - http://mofpi.nic.in/sites/default/files/english_4_years_of_transforming_indias_food_economy.pdf  

9 - http://pib.nic.in/newsite/PrintRelease.aspx?relid=168879

10 - https://economictimes.indiatimes.com/news/economy/finance/fdi-in-food-processing-sector-up-24-at-905-million-in-fy18/articleshow/65161763.cms 

11 - http://dipp.nic.in/sites/default/files/FDI_FactSheet_29June2018.pdf  

12 - https://www.worldfoodindia.in/world-food-india-2017-highlights

16 - http://mofapp.nic.in:8080/economicsurvey/pdf/082-101_Chapter_06_ENGLISH_Vol_01_2017-18.pdf

17 - http://pib.nic.in/newsite/PrintRelease.aspx?relid=176826