Boosting food processing through policy initiatives
Food processing is a vast activity, spread over the length and breadth of the country, even in remote regions where other activities become dormant and there are not many avenues of employment. Food processing continues to play an important role even in unfriendly areas. It saves the natural produce, adds value to it, provides employment at almost all levels, supports the farm economy, contributes effectively to exports, and significantly adds to our GDP. Considering these features, two important questions emerge as a bench mark of this activity.
- How much natural produce are we able to process and save
- How much value addition we provide to the natural produce
Given the circumstances and the lack of infrastructure and technology, the processing levels of our agri-produce are still far from satisfactory. The Govt. takes policy initiatives and fiscal measures from time to time to support the system and boost processing. This write up is dedicated to some of the significant policy measures taken by the Govt. in the recent past to provide impetus to food processing, save wastages of our agro-food resources and improve farmers’ income. The Govt. has worked hard on the subject and taken certain decisions which are highly appreciated. The Ministry of Food Processing Industries needs to be complimented in mobilizing these decisions. The industry is aware of the dynamic role played in this regard by Smt. Harsimrat Kaur Badal, Hon’ble Minister of Food Processing Industries, Govt. of India.
This Article also summarizes the challenges involved in the implementation of these schemes, given the infrastructural limitations and the vast geographical expanse of our country. It is very important to understand and address these challenges in time for the effective transformation of these policy initiatives on the ground.
Let us look at the schemes recently launched by the Govt
A. Micro Food Processing Enterprises Scheme
The ‘Micro Food Processing Enterprises Scheme’ is a step in the right direction with Rs.10,000 crore allocation expected to generate an overall investment of Rs.35,000 crore and new employment of 9,00,000 skilled and unskilled persons. This scheme provides a credit-linked capital subsidy @35%of the eligible project cost with a maximum ceiling of Rs.10 lakh per unit and beneficiary’s minimum contribution of 10%, the rest being supported by banks.The expenditure under the Scheme would be shared in 60:40 ratio between Central and State Govts, in 90:10 ratio with North Eastern and Himalayan States, in 60:40 ratio with UTs with legislature and 100 per cent by Centre for other UTs.
This is the first time that such a scheme has been provided for micro food processing enterprises who face a number of challenges which limit their performance and growth. The scheme is very encouraging but a few challenges need to be taken care of.
- The requirement of mandatory sharing of 40% of expenditure by States (10% for North Eastern & Himalayan States) appears to be a road block in the execution of this scheme.
- Moreover, effective implementation of a scheme of this magnitude, spread over the entire country, will require ‘Govt. Coordinating Agencies’ which can hand hold the micro enterprises, farmer producer organizations/cooperatives,self help groups and other entrepreneurs to avail the facilities of the scheme without any hassle or wasting too much time or incurring any cost.
- There is also the challenge of providing micro food enterprises with transitional support into the formal framework and increased access to common processing services, laboratories, technical support, storage, packaging, marketing, capability building and incubation services.
These issues need to be addressed soon to sustain and formalize micro food processing enterprises and save the perishable agri produce.
B. Adoption Of One District One Product(ODOP)Approach
The Micro Food Processing Enterprises Scheme has adopted a ‘One District One Product’ approach to focus on the most potential product of each District (including the adjoining District in a State if so required) for availing economies of scale in common services, infrastructure facilities, logistics, warehouses, cold storages, marketing support etc. The State would identify the food product for a District which can be a perishable produce based product or cereal based product or a product widely produced in a District.
An illustrative list of such products includes mango, potato, litchi, tomato, tapioca, kinnu, honey, bhujia, petha, papad, pickle, spices, millet based products, phoolmakhana, fisheries, poultry, meat, minor forest products in tribal areas, traditional Indian herbal items like turmeric and amla as well as animal feed. It is intended to support efforts to reduce wastage and manufacture products for conversion of waste to wealth. This would also provide momentum to the allied sectors.
The scheme would be of special advantage to the North Eastern Region since a number of items, such as pineapple, banana, turmeric, ginger, chillies, oranges, black rice, bamboo shoots, cardamom, mushrooms and organic products are available there in abundance.This is a very innovative scheme aimed at cluster based development of selected agri-produce in Districts,which can serve both domestic and export purposes. It will also enhance local skills in the selected produce/activity, particularly for farmers and women self help groups and tribals.
Provision has also been made that NIFTEM (National Instituteof Food Technology Entrepreneurship & Management) and IIFPT (Indian Institute of Food Processing Technology), two academic and research institutions of national importance under the Ministry of Food Processing Industries, along with State Level Technical Institutions selected by the States, would train the micro enterprises for product development, packaging, machinery, capacity building etc.
However, some challenges are envisaged in the implementation of the scheme as described below.
- This scheme largely depends on State Governments and District Authorities for identifying the select produce of each District and providing easy access to the required facilities for cluster development and sustenance of units. While the participation of States/Districts is welcome, a unified system of interaction needs to be evolved, lest the ambitious scheme will not produce much result.
- The administrative architecture at all levels can take significant time to set up before much result can be expected.
- There can be coordination issues among committees at National, State and District levels as well as Project Management Units and Consultants appointed for implementation of the scheme.
C. Pradhan Mantri Kisan Sampada Yojana (PMKSY)
The Pradhan Mantri Kisan Sampada Yojana is a comprehensive scheme for boosting agro-marine processing in the country and development of agro-processing clusters. An allocation of Rs.6,000 crore was made for the period 2016-20 to begin with, coterminous with the 14th Finance Commission Cycle. The scheme has an ambitious program to create modern food processing infrastructure in the country with an efficient supply chain system from farm gate to retail outlets.
In addition to providing a boost to the growth of food processing, this scheme will help to bring better revenue for farmers, reduce wastage of agricultural produce, create huge employment opportunities,and enhance the export of processed foods. The scheme echoes the objective of doubling the income of farmers and providing consumers with value added food products.
The PMKSY expands into a number of important sub-schemes focused on different activities of the food supply chain as enumerated below for better management of the scheme.
- Mega Food Parks
- Integrated Cold Chain and Value Addition of Infrastructure
- Creation/Expansion of Food Processing/Preservation Capacities
- Infrastructure for Agro-processing Clusters
- Creation of Backward and Forward Linkages
- Food Safety and Quality Assurance Infrastructure
- Human Resources and Institutions
The Pradhan Mantri Kisan Sampada Yojana is envisaged to attract an investment of over Rs.31,400 crore and enable handling of 334 lakh MT of agri-produce valued at Rs.1,04,125 crore. The scheme is expected to generate 5,30,500 numbers of direct and indirect employment in the country, and benefit more than 20 lakh farmers. These are challenging targets indeed.
However, a restricting factor has created practical difficulties in the implementation of the scheme as its application is limited to Food Parks and certain State Industry Clusters/Designated Areas. It is understood that the scheme ventures to mobilize the use of Food Parks and Designated Areas set up by the Central/State Govts. The downside of this objective is that most entrepreneurs do not find it practical to relocateto, or bind themselves to the specified locations. There are also concerns of availability of raw materials and manpower as well as distance from markets. Some alternatives have to be provided under the scheme to widen its scope. Difficulties have also been experienced by entrepreneurs in obtaining the scheme related support from financial bodies. All such critical aspects need to be resolved to make the scheme more popular and effective.
D. Operation Greens (TOP To TOTAL)
The Operation Greens Scheme which was launched earlier for Tomato-Onion-Potato (i.e. TOP) has been now extended to other Perishable Fruits & Vegetables i.e. TOP to TOTAL,in order to protect the growers of fruits and vegetables from making distress sale during the glut crop season and to reduce post-harvest losses. The Operation Greens Scheme is implemented by the Ministry of Food Processing Industries and is designed to strengthen the horticultural sector.
This scheme will prove subsidy for Transportation and Storage for notified horticultural produce, as recommended by the Ministry of Agriculture or the State Govt.,from production areas to consumption centers. The Ministry of Food Processing Industries will provide subsidy @50% of the cost of the following two components, subject to cost norms.
- Transportation of eligible crops from production areas to consumption centers, and/or hiring of appropriate storage facilities for the eligible crops, for a maximum period of three months.
- Eligible operating entities, who comply with the aforesaid essential criteria may undertake the transportation and/or storage of notified crops from notified production areas, without any prior approval from the Ministry of Food Processing Industries, and thereafter, submit their claim on online portal. The applicant should register on the portal https://www.sampada-mofpi.gov.in/Login.aspx before carrying out the above transportation/storage of fruits and vegetables.
The operative entities eligible for the subsidy are,Food Processors, Farmer Processor Organizations/Cooperatives, Licensed Commission Agents, Co-operative Societies, Exporters, Individual Farmers, State Marketing/Co-operative Federations, Retailers etc. who are engaged in processing/marketing of fruits and vegetables.
E. Free Online Skilling Programme
The Ministry of Food Processing Industries, in collaboration with NIFTEM (National Institute of Food Technology Entrepreneurship & Management) and FICSI (Food Industry Capacity & Skill Initiative, also known as the Sector Skill Council for Food Processing), is planning to start free online skilling classes for SC and ST entrepreneurs for providing them with e-learning. When certified, these entrepreneurs can start their own ventures or, if they are looking for a job, they would have better employment potential. The related handbooks and facilitator’s guide have been created by the Ministry, through NIFTEM, which will be converted into e-learning format with suitable digital content and online assessment service. These will be made available on web and on android based apps on mobiles in English, Hindi and other regional languages which will be prepared by FICSI.Some highlights of FICSI Online Training & Assessment are as below.
- Training will be held online and can be done by candidates in their own time in a maximum of 60 days.
- Training will be conducted with the help of presentations, interactive animations and videos.
- Training will be module based with a quiz after each module to test the knowledge of the candidates.
- A certificate of participation will be issued to the candidates through FICSI Training and Assessment Academy after completion of all the training modules.
As an agrarian country having 130 agro-climatic zones and fertile soil, a 7600 km coast line, the largest producer of most agro-food commodities, a vast dedicated farmer population, an enviable scientific and skilled manpower pool, it is time India crosses the expected Processing Level Barrier. The various Schemes launched by the Govt. to boost food processing in the country demonstrate the will and determination to make it happen. All the operating entities along the food value chain have to work meticulously and dedicatedly to achieve this target. Trust and effective coordination is the way ahead. Govt. bodies, Industry and financial institutions have to synergize towards this national objective, lest the rapidly increasing global challenges will take us over.
(Amit Dhanuka is CEO, Kejriwal Bee Care (India) Pvt. Ltd. and Former President, AIFPA. Views expressed are personal.)