[Mission 2024] INSIGHTS DAILY CURRENT AFFAIRS + PIB SUMMARY 12 January 2024 – INSIGHTSIAS

GS Paper 3

 Syllabus: Agriculture

 

Source: ET

 Context: Indian processed food exports have witnessed a remarkable 150% growth over the past nine years.

 

Significant Achievements of the Indian Food Processing sector:

1. Investment in the Processed Food sector: India’s Food Processing Sector emerged as the sunrise sector and attracted FDI investments of about Rs 50,000 crore in the past nine years
2. Agricultural Exports: India’s agricultural exports have reached an aggregate of about $53 billion during this period.
3. Geographical Indications (GIs): India boasts 158 food and Agri Geographical Indications (GIs), emphasizing the unique and region-specific nature of its food products.
4. One District One Product (ODOP) Initiative: Under the ODOP initiative, 708 unique food items have been identified across districts, promoting local specialities.
5. Global Demand for Indian Foods: There is a burgeoning demand for Indian foods globally.
6. Potential: India’s food processing market is estimated to reach $535 Billion by 2025

 

Status:

India’s food processing sector, a shining pillar of the Indian economy, has been booming in recent years. Holding a place among the largest food processing industries in the world, it is responsible for a significant portion – about 32 per cent – of India’s overall food market. It employs 13 million people directly and about 35 million people indirectly.

 

Challenges faced by the FPI: while the food processing industry in India has been on an impressive growth trajectory in recent years, there are certain issues that are holding it back.

1. Gaps in supply chain infrastructure (i.e., lack of primary processing, storage and distribution facilities);
   • g., More than 30% of the produce from farm gates is lost due to inadequate cold chain infrastructure.
2. Fragmented Supply Chains: High intermediation and lack of direct linkage between farmers and processing companies increase sourcing costs and quality issues. Also hampers traceability and adoption of global safety standards.
3. Infrastructure Bottlenecks: Insufficient cold storage, refrigerated facilities, and testing laboratories close to production centres result in 30-40% food losses and raised transport costs for processors. Constraint’s scale-up and agility.
4. Backward Regulatory Systems: Complex registration/licensing norms, high compliance requirements, and differential state policies limit new investments. Outdated systems are unable to ensure food safety in the wake of more chemical usage. Digitalization lacking.
5. Low Processing Levels: Of the total agriculture and horticulture produce in India, merely around 10% undergoes processing, vs 60-80% for developed nations. Skill gaps limit product diversification and value addition.
6. Inadequate link between production and processing: Severe under-penetration of formal post-harvest infrastructure leads to farmers opting for quick spot sales rather than supplying processing companies under contracts. Hamper’s visibility and ability to invest in processing equipment.
7. Seasonality of operations and low-capacity utilization: Seasonal gluts of F&V production cause price volatility for farmers, pressing disposal to avoid losses.
   • In contrast, processors work under low gear in lean periods with high idle capacity as raw material supply tapers.
8. Institutional gaps in the supply chain, dependence on APMCs: Reliance on fragmented APMC mandi intermediaries to aggregate produce adds 3-4 steps, wastage and commission fee burdens before linking to bulk processors. Holds up modernization efforts.

 

Measures taken by the government to promote the growth of the FPI.

1. Pradhan Mantri Kisan Sampada Yojana (PMKSY): it aims to modernize and upgrade the food processing sector in India, including the supply chain.
   1. Under this scheme, the government provides financial assistance for the development of food processing infrastructure, including cold storage facilities, processing centres, and logistics support.
2. National Cold Chain Grid (NCCG): launched by MoFPI, it is aimed at creating a seamless network of cold storage facilities across the country.
   1. This network can help to reduce post-harvest losses and improve the quality and shelf life of food products.
3. Scheme for Creation of Backward and Forward Linkages: to perishable horticulture and non-horticulture produced by plugging the gaps in the supply chain in terms of availability of raw material and linkages with the market.
4. National Agriculture Market (eNAM): The eNAM platform is a Pan-India electronic trading portal for agricultural commodities. It provides a common platform for buyers and sellers to trade in agricultural products, including fruits and vegetables.
   1. This platform can help to reduce supply chain inefficiencies and improve price transparency for farmers and other stakeholders.
5. Also, the Logistics challenge of the supply chain is being taken care of by leveraging the existing PM-Gram Sadak yojana, BHARATMALA, and SAGARMALA

 

Transformative approach needed for sustainable development of FPI:

 

Conclusion

Food processing has a promising future, provided adequate government support is there. It has the capacity to lift millions out of undernutrition. The government has its work cut out to develop industry in a way which takes care of small-scale industry along with attracting big-ticket domestic and foreign investments.

  

Insta Links:

 

Mains Links

Q. What are the reasons for the poor acceptance of a cost-effective small processing unit? How can the food processing unit be helpful to uplift the socioeconomic status of poor farmers? (UPSC 2017)

 Q: Elaborate on the policy taken by the government of India to meet the challenges of the food processing sector. (UPSC 2019)

 

Prelims Links: