AGRICULTURE & PROCESSED FOOD INDUSTRY

The food processing industry is one of the largest in India, ranking 5th in terms of production, consumption and expected growth. The Indian food industry is projected to reach US$ 300 bn by 2015. India is among the 15 leading exporters of agricultural products in the world. Food industry is expected to grow by 20 % and value addition to increase by 35 % by 2015. The growth of the agriculture and allied sectors is expected to be around 5.4 % during 201011. Technological innovations, government initiatives, agro-climatic conditions and increase in food consumption will drive the sector towards growth. Overview of Indias FPI Share in world trade- 1.7% Contributes 9% to Indias GDP Low penetration levels Growing at a CAGR of 9% Accounts for 19% of Indias industrial force Food market: US$182 billion; food processing market US$ 70 billion

Structure of the Indian Food Processing Industry Organised sector- 25% Unorganised sector- 42% and Small scale 33%

Drivers & Challenges of Food Industry Drivers: Government policy initiatives High yields and profitability Private sector participation

Challenges Inconsistent approval system Lack of awareness and knowledge

INDIA - Facts & Figures Largest producer of Milk in the world (122 mn ton/an) in 2011 Largest Livestock population in 2003 2nd largest producer of Fruits & Vegetables(213 mn tn/an) -2011 3rd largest producer of Food grain (236 mn ton/an) in 2010 3rd largest producer of Fish (7.6 mn ton/an) in 2007 52% Cultivable land compared to 11% world average All 15 major climates in the world 46 out of 60 Soil types

Indian food industry (USD bn) Year 2004-05 2009-10 2014-15(P) Food processing sector 80 121 194 Food industry 180 250 345

Export data of products (2010-11) Product Floriculture Fruits & vegetable seeds Fresh Onions Walnuts Grapes Value (US$ mn) 62.82 38.44 382.1 34.36 90.37 Major export destination USA, UK, Germany, Netherlands, Japan Pakistan, Bangladesh, USA, Japan Bangladesh, UAE, Spain, Egypt, France, Germany Netherlands, UK, Bangladesh, UAE, Belgium `Belgium, USA, France, Russia Pakistan, Sri Lanka, Algeria Indonesia, Malaysia, Thailand, UK Angola, France, UAE, Singapore UAE, Thailand Saudi Arabia, Iran, Kuwait,UK Myanmar, Bangladesh, France, UAE

Dried and preserved vegetables Pulses Groundnut Alcoholic & non alcoholic beverages Dairy products Basmati rice Wheat

113.4 187.2 459.4 173.4 117.09 2320.8 0.12

Country Wise Global processed food Exports Year-2010-11 Country Australia India Brazil China USA Japan Malaysia Thailand Canada Europe Others Share in export % 1 1 3 5 6 1 1 3 2 59 18

Towns of Export Excellence Town Aroor, Ezhupunna, Kodanthuruthu & Kuthiathodu Kollam (Quilon) Indore Malihabad State Kerala Product category Seafood

Kerala Madhya Pradesh UP

Cashew products Soya meal & soya Horticulture Products

APEDA Export Promotion Council The Agricultural and Processed Food Products Export Development Authority was established by the Govt. of India in December, 1985 The products monitored are: Fruits, Vegetables and their Products Meat and Meat Products Poultry and Poultry Products Dairy Products. Confectionery, Biscuits and Bakery Products. Cocoa and its products, chocolates of all kinds Cereal and Cereal Products. Pickles, Papads and Chutneys. Herbal and Medicinal Plants Groundnuts, Peanuts and Walnuts Alcoholic and Non-Alcoholic Beverages. Floriculture and Floriculture Products

Agriculture Export Zones Product Pineapple Vegetables Mangoes Grapes & grape wine Apples Flowers Lychee Walnut Mango pulp & fresh vegetables Pineapple Kesar Mango Mangoes & vegetables State West Bengal Punjab Uttar Pradesh Maharashtra J&K Tamil Nadu Bihar J&K Andhra Pradesh Tripura Maharashtra Uttar Pradesh

APEDAs Financial Assistance Schemes Schemes for Market Development - Packaging Development - Feasibility Study, Survey, Consultancy & Database Up-gradation - Export Promotion & Market Development Schemes for Infrastructure Development Schemes for Quality Development - Promotion of Quality & Quality Control - Capacity Building & Organization Management Schemes for Research & Development Transport Assistance 2007-12

Promotional Measures VISHESH KRISHI AND GRAM UDYOG YOJANA (VKGUY) Objective-To promote export of Agricultural Produce & value added product Duty Credit Scrip benefits are granted with an aim to compensate high transport costs & to offset other disadvantages. Agri. Infrastructure Incentive Scrip- For exports made during a particular year, all Status Holders exporting products covered under ITC HS Chapters 1 to 24 shall be incentivized with duty credit scrip equal to 10% of FOB value of agricultural exports provided that the total benefits for all status holders put together does not exceed Rs 100 Cr The following capital goods shall be permitted for import: Cold storage units, Pre-cooling Units and Mother Storage Units for Onions Pack Houses (including facilities for handling, grading, sorting and packaging Reefer Van / Containers

ASSISTANCE TO STATES FOR DEVELOPING EXPORT INFRASTRUCTURE & ALLIED ACTIVITIES (ASIDE) Funds under the Scheme can be sanctioned and utilized for Creation of new Export Promotion Industrial Parks/Zones (Agri Business Zones) and augmenting facilities in the existing ones. FOCUS MARKET SCHEME (FMS) Objective-To offset high freight cost and other externalities to select international markets with a view to enhance Indias export competitiveness in these countries. Entitlement-Exporters of all products to notified countries shall be entitled for Duty Credit Scrip equivalent to 3% of FOB value of exports.

Ineligible Exports Categories Cereals, Sugar, Milk & Milk Products Export promotion capital goods (EPCG) for agro units In the case of EPCG licenses issued to agro units in the AEZs a period of 12 years reckoned from the date of issue of the licenses would be permitted for the fulfillment of export obligation. The agro units in the AEZs would also have the facility of moving the capital goods imported under the EPCG within the AEZ. An LUT/ Bond in lieu of BG may be given for EPCG license granted to units in the AEZs provided the EPCG license is taken for export of the primary agricultural product or their value added variants.

Quality Inspection Agencies System HACCP GAP- EUREP ISO 9000 BRC SQF Target sector Food processing industry Primary agriculture Agriculture, industry & service Food processing & retailers Primary & secondary agriculture

Swot analysis Strengths India is one of the largest food producers in the world. Diverse agro-climatic conditions Large and diverse raw material base suitable for food processing companies Huge scientific and research talent pool Well developed infrastructure and distribution network Strategic geographic location

Weaknesses High requirement of working capital Lack of grading standards Low technology level Highly bureaucratic investment process, government inefficiency, and corruption have also discouraged foreign investors.

Opportunities Threats FDI and other routes of investments by MNCs pose a potential threat to a large number of Indian players. Loss of trained manpower to other industries due to better working conditions Rapid developments in contemporary and requirements of the industry may lead to fast obsolescence. Large crop and material base in the country due to agro-ecological variability offers vast potential for agro processing activities. Agriculture offers enormous opportunities along its value chain. Globalization may lead to technological advancement. Rising disposable income levels (50 % of household expenditure is on food items)