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Prospects of
Food and Dairy Industry
in India
1
Importance of
Technology
2
Basic Facts
The Second largest grower of fruits – 15% of world output
–Low share of global Exports at 0.5%
The Second largest grower of vegetables – 11 % of world
output
–Low share of global exports at 1.7%
–Cold storage facility available for only 10% of produce
Lowest cost producer of fruits & vegetables
–Low farmer income – farmer suicide
Highest producer of milk
– Organized dairy accounts for only 30% of milk produced
– Only 70,000 Ton cold storage capacity for 90 million Tones
produced
– Poor yield per cow
Second largest cattle population
– 5500 registered & 25770 unregistered slaughter houses with no
chilling, freezing & cold storage facility as hot meat market
prevails
Prospects of Food Industry
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Facts (cont….)
• Fifth largest producer of eggs
– Poultry meat sold as hot in retail market
• Sixth largest producer of fish
– 20 – 30% damage and no cold storage facility in WB, AP, Goa
• Low processing
– 2.20 % in fruits
– 35 % in milk
– 6 % in poultry
• Value addition – 20%
• India’s current share in world trade of processed foods
– 1.60 %
• Poor lab to land transfer of technology and adoption of
new varieties. example of pineapple
Source: Task force Report on Development of cold chain in India – GOI/CII
Prospects of Food Industry
APEDA data
4
Facts (cont….)
• Market surplus of fruits & vegetables – 88%
– Farmer sells immediately due to perishability & absence of
proper infrastructure to keep it for longer period
• Post Harvest wastage of fruits & vegetables – 25 to 35% valued
at over Rs 45,000 crore
– Losses as above in India is more than consumption of same in
UK
• Market surplus of food grains– 60%
– Farmer keeps some for own consumption, seed purpose and to
give to labour as wages
– Loss in above equal to annual food grain production in Australia
• Cost of wastage - 6 times amount spent on food subsidy
• Farm gate price- 25% of domestic consumer retail price and
against 50% in developed countries
Source: Task force Report on Development of cold chain in India – GOI/CII
Prospects of Food Industry
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Key Drivers – To be a Global Agri Super Power
2
Political
environment
Strong and
Credible
Coordinating
& Promotion
agency
Optimal Agro
climatic
conditions
1
3
Strong
Demand
5
Strong
Consumer
base
Prospects of Food Industry
Strong
Corporate
leadership
4
6
Role of Key Drivers
Agro climatic
conditions
• Favorable Growing conditions
• Sizeable irrigated acreages.
• High land productivity, land being a very
scarce resource
Political Environment
• Attracts Investment
• Provides Stability
• Encourages Infrastructural development
Strong and Credible
Coordinating &
Promotion Agency
• R & D initiatives including development
of high yielding varieties
• Financial & Technical Assistance
• Extension activities – Grower awareness
Strong Corporate
Leadership
Consuming and
Processing Industry
• Risk taking abilities
• Managerial skill development
• Risk mitigation
• Internal consumption to avoid surplus
stock accumulation
• Encourages Economies of scale
• Globally Competitive to serve wider base
of consumers.
7
Is India Ready to be a Global Power ?
Low level of value
addition, high post
harvest loss
Prospects of Food Industry
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Challenges And Strategy For Future …. Food processing
Challenges
Opportunities
• Utilization of scarce resources –
MORE CROP PER DROP, power etc
• Varying taste preference within the
country
• Increasing International Competition
• Non tariff barriers
• Integrated Food law to remove
multiplicity of food laws & regulatory
agencies
Indian domestic market
Diversifying into new markets
and product segments
Post harvest loss management
itself to provide funds for
investment
Strategy
Enhancing the sales of Value added products
Creating Economies of Scale
‘Lab to Land & Farm to Fork’ linkages
Introducing innovative products
Prospects of Food Industry
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India …….. A land of opportunities
•
52% cultivable land as against 11% world wide
•
Unsurpassed Natural Advantages
– All the 15 major climates of the world
– 46 out of the 60 soil types
– 17% animal, 12% plant and 10% fish genetic resource of the world
•
India is one of the largest producers of wheat & rice, second largest producer of
Groundnut, fruits & vegetables and tops in production of mangoes and bananas.
•
India is the world’s largest producer of milk.
•
India has potential to be leading global food supplier if it creates efficient supply
chain & marketing.
•
Food processing sector ranks fifth in terms of contribution to GDP
•
Indian urban food market estimated at 350,000 crore
Source: FICCI/KPMG study and Task force Report on Development of cold chain in India
– GOI/CII
Prospects of Food Industry
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Can COCHIN in India
be a sourcing hub for food products ?
• Good governance
–
–
–
–
–
–
Strong , Stable and reform oriented government
WTO signatory
Strong economy comparatively resilient to the current economic crisis
Focus on improving the Road connectivity
Vision to solve the power situation – Nuclear energy
Improving relationship with neighboring countries and a more
important role in the WORLD ORDER
• Focus on agriculture & rural sector
–
–
–
–
Has a Strong agriculture base
Increased out lay for rural spend
Rural economy to be given the next big push to GDP
Annual rural income to increase from 2.8% to 3.6% over next 2 years
Source: FICCI Prospects
– KPMG of
study
Food Industry
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Towards being the 5th largest consumer market by 2025
– Large young earning population
• 50% of population under 25 years of age
• Ready to experiment and try out new products
– Increase in number of upper middle class & middle class by
159 % & 63 % respectively
• Urban population projected at 40% by 2020
• Middle class of 200 – 250 million spread across the country to
increase to 580 million by 2025
– Dual income households
• Higher disposable incomes
• Ready to try out value added products
Source: Mc Kinsey Report May 2007: The Rise of India’s consumer market
Prospects of Food Industry
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Suggestions ….
• Reduction of wastage /spoilage to be tackled on a war footing
– Accelerated establishment of cold chain networks
– Irradiation facilities and pest free warehouses
– Encourage SSI units and corporate to set up food processing
units
• Improvement of productivity – both land and manpower
– Example the case of Rubber where India has the highest land
productivity in the world
– Change in cultivation practices such as irrigation for paddy rather
than method of flooding the fields
• Price stability
– Make farming remunerative to attract talent and retain farmer
interest
Prospects of Food and Dairy Industry
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Suggestions …… Role for corporate
•
Incentives to Corporate to enter core farming – land ceiling restrictions
•
Increase Mechanization to tackle low availability of labour and to remain a low
cost producer
•
Liberalized credit norms for agricultural – production , marketing and
infrastructure development
•
Changes in market regulatory framework to allow corporate to establish market
yards
– At present 7521 regulated markets which lack critical infrastructure
•
Review of legal instruments to facilitate entry in marketing activities
Prospects of Food Industry
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Dairy Industry in India
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Dairy Industry in India
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