Abm Final

AGRO PROCESSING- THE NEXT
FRONTIER
COMPILED BY: Monika , Prerna , Nitish & Manleen

Agenda
• Meaning & Introduction
• Significance & Importance
• Current Status
• Shortcomings
• Growth Prospects
• Changing Socio Economic Environment
• Government Policies
• Credit & Finance
• Infrastructure Development
• Public-Private Partnership
• Introduction of Supporting Institutions
• Liberalization of Controls & Regulation
• SWOT Analysis
• Plan & Strategy
• Goal 2015
• Areas of Development
• Conclusion

Meaning & Introduction
Agro processing is defined as “Subset of
manufacturing that processes raw materials and
intermediate products derived from the agricultural
sector”.

Transforming products originating from agriculture,
forestry and fisheries.

All operations from the stage of harvest till the
material reaches the end users in the desired form,
packaging, quantity, quality and price.

Undergoing rapid transformation. Strong macro-
economic fundamentals and the changing socio-
economic scene are driving what was once a
traditional, small-scale processed food production
system into a modern industry

Evolved from traditional subsistence level farming
to commercial agriculture producing high value
and processed products.

Recognized as a 'sunrise industry' with a vision to
make India the Food Basket of the world, achieve
what has been achieved in the field of computer
technology.

Significance & Importance
India occupies a dominant position in world agriculture -

52% of total land is cultivable as
against 11% which is the world
average.

Largest gross cropped area (160
mn hectares )

Leading producer of cereal crops,
pulses, tea, jute and allied fibers
and fruits & vegetables.

Second largest livestock population
in the world &Largest producer of
milk in the world. In fact, India
accounts for 17% of the animals,
12% of the plants (including over
10,000 species of aromatic and
medicinal plants) and 10% of fish
genetic resources of the world.

India has nearly 46 soil types out of
60 different soil type available in
the world.

Current Status
India is a one of the leading producer of agricultural and livestock commodities,
however India’s share in world trade of processed food is 1.6%, and value
addition is 20%.

India's gross cropped area of 160
mn hectares nearly equals the
size of US farmland and is larger
than that of Europe and China.

40% this land being irrigated.

It is estimated that a 1%
increase in irrigated area
generates a 1.6% increase in
crop output and a RoI of 17%.

Realizing this, the Indian
government has been making a
concerted effort to increase gross
cropped area under irrigation.

Shortcomings
India's share in international food trade is negligible less than 1.5% share of
global agritrade.
Socio Economic Environment and Demand for Processed Foods &
Unorganized Processing industry.

Poor Linkages between Public & Private sector.

Policy Issues in Food Processing (APMC ACT, Commodities Act, Taxes,
Credit)

Traditional and Subsistence Farming, Market Linkages & Infrastructure.

Unorganized Agricultural Sector small farms (in all 100 million, with farm
size of less than 1.2 hectares divided into 3-10 separate plots), which
constrains productivity levels or yield per hectare.

Long value change leads to Cost
Value of wastages is at over differential between the mandi &
Rs50,000 crore the market price to 60-100%

Growth Prospects

 Changes in Socio Economic Environment.

 Changes in Policy Environment

 Credit & Finance

 Infrastructure Development

 Introduction of Supporting Institutions

 Initiatives in Public Private Partnership Mode

 Changes in Controls & Regulations.

 Tax exemptions for exports, processing and imports
of processing technology.

Changing Socio Environment

• Increased Urbanisation

• Higher incomes with
increasing population of
working women's.

• Increasing Nuclear Families
leading to more demand for
processed food.

• Higher consumer awareness
on processed food

Changes in Government Policies

APMC ACT MODEL ACT

 Most states prohibits  No compulsion to sell through
transactions outside the existing markets administered
regulated mandis. by the APMC .

 Do not facilitate procurement  Enables procurement of
of agricultural produce agricultural produce from the
directly from farmer’s fields Farm Gate

 Most states does not  Enables Contract Farming &
encourage direct marketing Provision made for direct sale
and Contract Farming of farm produce.

 Do not allow investment by  Encourage private sector
the private sector for investment in the area of
improving the infrastructure agriculture.

 The purchaser has to be a
registered agent at the
wholesale market
(Commission Agent).

Credit & Finance

The Union Budget for financial year 2006-07 was
the first Union Budget that had focused attention on
food processing and food technology. Key measures
undertaken included

1. Decision to treat the food processing sector as a
priority sector for bank credit
• v
3. Creating of separate window with a corpus of
Rs. 1000 crore to NABARD for refinancing loans

Infrastructure Development
Food Parks

Modernised Abattoirs
Packaging Centre

Value Added Centres

Public Private Partnership
Major Infrastructure Development Projects are
part of PPP initiative.

• Modern Terminal Markets
• Development of Abattoirs
• Food Parks

Introduction of Supporting
Institutions

• 1986- Agriculture & Processed Food Products Export
Development Authority (APEDA) initiated to develop
agricultural commodities & processed foods and their
export.

• Agri- Clinics & Agri Business Centers – In association with
NABARD launched programmes to enhance the reach of
modern farming technologies to farmers across country.

• National Institute of Food Technology Entrepreneurship
(NIFTEM) – Objective is development of world class food
technologists, creation of Entrepreneurs and Managers in
the food Industry.

• 1994- Small Farmers Agri Business Consortiums (SFAC) –
Objective to set up an autonomous body for the production
and development of small farmers agri business activities.

Controls & Regulations

• 100% Foreign Direct Investment

• No Industrial License required for all food and agro
processing Industries

• Liberal export/ Import except for items on negative list

PROCESSING
INDUSTRY INFRASTRUCTURE IN
INDIA

PLAN AND STRATEGY

The objectives of agro-processing programmes in India should be

 Minimize product losses

 Add maximum value

 Achieve high quality standards

 Keep processing cost low

 Ensure that a fair share of added value goes to the
producer

Goal 2015

Ministry of Food Processing
Industries had commissioned a
Vision document for the growth of
FPI sector.

 Aim to increase processing of
perishables 20%

 Increase value addition from the
present level of 20% to 34%

 Share in global trade up from 1.6%
to 3%

Areas Of Development

 Inclusion of small Farmers in modern Value chains.

 Small and Micro Enterprise Linkage with Modern agribusinesses.

 Regionally balanced growth

 Ensure effective implementation of the plans and schemes proposed.

 On the policy front, strong regulatory framework for managing contracts
with farmers is important.

conclusion
Agro processing industry is
widely recognized as a 'sunrise
industry' in India having huge
potential for uplifting
agricultural economy by
exposing traditional Indian
agriculture to modern
technologies, creating large
scale processed food
manufacturing and food chain
facilities and consequently
generate employment and
export earnings.

Abm Final

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