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 Elaborate on the policy taken by the government of India to meet the challenges of the
food processing sector.

The food processing industry (FPI) is considered a sunrise sector that has gained prominence in recent
years. The industry is of enormous significance because of the vital linkages and synergies that it
promotes between the two pillars of our economy i.e. industry and agriculture. It has a lot of scope
which can help in boosting economic growth and this has led Government to initiate many policy
measures to boost food processing industries.—5 trillion econkomy

Scope of food processing industry in India:

1. As per an estimate, India’s current food processing industry is estimated at USD 130 Billion and
expected to attract huge domestic and foreign investment. Some of the key factors which are
likely to increase the demand for processed food and consequently the food processing industry in
the coming years are –

2. India is a country of over 1.25 billion population. With rising middle class having a considerable
disposable income, the domestic market offers 1.25 billion opportunities for the sector.

3. India ranks no 1 in the world in the production of milk, ghee, ginger, bananas, guavas, papayas
and mangoes. Further, India ranks no 2 in the world in the production of rice, wheat and several
other vegetables & fruits. If the surplus production of cereals, fruits, vegetables, milk, fish, meat
and poultry, etc are processed and marketed both inside and outside the country, there will be
greater opportunities for the growth of the sector.

4. Due to rapid urbanization, food habits are changing rapidly towards value-added foods. The
change is accentuated by the fact that over 65% of India’s population is 35 or under, who are
inclined to have processed food.

5. Next to China, India is among the fastest growing economies in the world. The recent quantum
jump in the ease of doing business ranking of the World Bank (from 130 to 100) indicates the
conducive business climate in the country and expected to attract foreign investment into this
sector.

6. As per an estimate, around 40 percent of total food production is wasted due to the
inadequate facilities for transportation, storage, processing and marketing. If these deficiencies
are addressed, there is a huge scope for the development of the sector.

Government has initiated the following measures for the development of the food processing sector:
1. Pradhan Mantri Kisan Sampada Yojana (PMKSY):It is an umbrella scheme that incorporates
various ongoing schemes like Mega Food Parks, Integrated Cold Chain, Value Addition
Infrastructure, Food Safety and Quality Assurance Infrastructure, Infrastructure for Agro-
processing Clusters, Creation of Backward and Forward Linkages and Creation and
Expansion of Food Processing and Preservation Capacities.
2. Mega Food Parks Scheme: It aims at providing a mechanism to link agricultural production to
the market by bringing together farmers, processors and retailers to maximise value addition,
minimising wastage, increasing farmers’ income and creating employment opportunities
particularly in the rural sector. A Mega Food Park entails an area of a minimum of 50 acres and
 works in a cluster based approach based on a hub and spokes model.
3. Scheme of Cold Chain, Value Addition and Preservation Infrastructure: The objective of the
scheme is to provide integrated cold chain and preservation infrastructure facilities, without any
break, from the farm gate to the consumer. It covers pre-cooling facilities at production sites,
reefer vans, mobile cooling units as well as value addition centres.
4. Modernisation of Abattoirs scheme: The main objective of the Scheme is a creation of
processing and preservation capacities and modernisation and expansion of existing food
processing units with a view to increasing the level of processing, value addition leading to
reduction of wastage.
5. Make In India: As part of the Make In India campaign, food processing sector was identified as
one of the 25 focus areas. Accordingly, the policy ecosystem has been revamped to attract
financial, technological and human resources into the sector. Allowing 100% FDI through
automatic route into this sector is also a significant step in this direction.
6. Food Processing Fund: A special fund in the NABARD worth Rs. 2,000 crore, designated as the
Food Processing Fund, was set up in the FY 2014-15 for providing affordable credit to food
processing units in Mega & Designated Food Parks.

As per an estimate, India’s food consumption is currently valued at USD 370 Billion and is expected to
reach USD 1 trillion by 2025. The development of food processing industry is necessary due to the rise in
the disposable income in the hands of middle class, changing food habits and rapid urbanization, the
changing dietary preferences towards the processed and packaged food. Besides, a well-developed food
processing sector with higher level of processing helps in the reduction of wastage, improves value
addition, promotes crop diversification, ensures a better return to the farmers, promotes employment as
well as increase export earnings. This sector is also capable of addressing critical issues of food security,
food inflation and providing wholesome, nutritious food to the masses

 Examine the role of supermarkets in supply chain management of fruits, vegetables and
food items. How do they eliminate number of intermediaries?
Supermarkets CLUSTERED MARKETS WITH HIGH CLASS SPECIALITIES FOR SALE AND
PURCHASE……………….play a crucial role in supply chain management of fruits, vegetables, and
food items. They are the primary retail channels for these products and directly impact the supply
and demand dynamics. Here's how they eliminate a number of intermediaries:
• Direct Procurement: Supermarkets often have a direct procurement mechanism with suppliers,
eliminating the need for middlemen such as wholesalers. This ensures a more efficient and cost-
effective supply chain as supermarkets can negotiate directly with suppliers to ensure the best
possible prices and quality.
• Controlled Supply Chain: Supermarkets have a controlled supply chain that is closely monitored
and managed, reducing the risk of spoilage and reducing the number of intermediaries required to
transport the products from the farm to the consumer.
• In-Store Ripening: Some supermarkets have in-store ripening facilities for fruits and vegetables,
eliminating the need for an intermediary who specialises in the ripening process.
• Use of Technology: Supermarkets have implemented advanced technology such as RFID,
barcoding, and GPS tracking systems to monitor the supply chain and improve its efficiency. This
eliminates the need for intermediaries and reduces the risk of spoilage and product waste.
In conclusion, supermarkets play a crucial role in the supply chain management of fruits, vegetables,
and food items by eliminating a number of intermediaries and improving the efficiency and cost-
effectiveness of the supply chain. This results in fresher produce and lower prices for the consumer.

 What are the reasons for poor acceptance of cost effective small processing unit? How
the food processing unit will be helpful to uplift the socio-economic status of poor
farmers?
Food processing is the process of transformation of raw agricultural products into other forms of
food. It includes different food processing methods like grinding grain to make raw flour, potato
chips from potatoes, etc.
Previous Initiatives
Food infrastructure like packing labeling was conducted in the mega food park. Investment cost was
curtailed for this initiative.
Several government schemes have been initiated and the green revolution boosted the agricultural sector.
Problems
 Small units are debarred from the facility of packaging, cold storage, warehousing, logistics,
supply chains, etc.
 Lack of manpower and lack of skillset created impediments in the production sector.
 Climate change and string fruits in the cold storage for a long time cause wastage.
 Lack of adequate technology.
How a small processing unit helps
 The process units enable farmers to produce other food-related products that are long-lasting and
the wastage of food also gets reduced. CROP DIVERSFICATION—BETTER FARM RETURNS
–DFI—increase profitability yof food –assured market for their produce
 The income of farmers also increased due to the adoption of the food processing method.
 The export facility becomes reachable to the farmers.
 The transition of farmers from direct agricultural to non-agricultural activities ultimately
improves the condition of the farmers.

Comment
The government has initiated several schemes like Pradhan Mantri Kisan Sampada Yojana,
Krishonnati Yojana, SAMPADA scheme with the vision of doubling the income by 2022.
Addressing all the problems faced by the small processing units, the government will definitely
succeed to enhance the condition of agriculture as well as the

 India needs to strengthen measures to promote the pink revolution in food industry for
better nutrition and health. Critically elucidate the statement.
  What are the impediments in marketing and supply chain management in industry in
India? Can e-commerce help in overcoming these bottlenecks

The food processing sector is critical to India’s development, for it establishes a vital linkage and synergy
between the two pillars of the economy, the Industry and Agriculture. But food processing industries face
many challenges especially in marketing and supply chain management. These impact overall income of
farmers. E-commerce can help in overcoming these. The food processing industry is one of the largest
industries in India and ranks fifth in terms of production, consumption and exports. As per the latest
data available, food processing sector is expected to reach US$ 258 billion in FY15.

Issues in agricultural marketing:

1. There is fragmented market and poor mandi linkage to farmers which impede transportation.

2. Market domination by organised traders by dominating mandis is an issues that prevent other farmers
to gain benefits.

3. There is a lack of direct access to market for the farmers that lead to their exploitation in the hands of
intermediaries.

4. Farmers could buy and sell only in the government-designated (APMC) market-yards, thus
accessibility is an issue.

5. There are information irregularity between the buyers and sellers that lead to corrupt practices, giving
inaccurate input data.

6. There are issues of storage facilities that often lead to spoilage of the produce.

Issues in supply chain management:

1. Food processing sector is mostly dominated by MSMEs and they face issues of non-availability of
institutional credit, outdated technology, infrastructure constraints, especially lack of integrated cold
storage, skilled manpower shortage, etc.

2. Poor transportation (lack of multi-modal linkages) and storage leads to delay in procuring perishable
items and thus leads to losses.

3. APMC laws in some states don’t allow food processing industries to procure directly from farmers and
thus increases cost due to coming of middlemen.

4. There is lack of connectivity from villages to markets.

5. The food supply chain is complex with perishable goods and numerous small stakeholders. In India, the
infrastructure connecting these partners is very weak.

6. Demand forecasting is totally absent and the farmers try to push whatever they produce into the market.

7. At present the unorganized retailers are linked with farmers through wholesalers or commission agents.
The commission agents and wholesalers redundant supply chain practices make unorganized further
inefficient.

Significance of e- commerce in removing these issues:

1. Synchronisation: With wide participation and perfect sync between markets and stakeholders e-
commerce can play a proactive role.

2. Better quality: E-commerce authorities can work to encourage farmers to produce better quality crop and
meeting exchange standards.

3. Better price: Price distribution alerts through mobile phones could serve as a reliable reference price for
farmers.

4. Monitoring: Monitoring the warehouses for the incoming and outgoing stocks will make the initiative
stronger.

5. Internet penetration: Rising internet uses and penetration of smartphones provide a great opportunity.
Rising aspiration, greater consumer awareness and easy payment options would help in a big way. Most
important, the growth is fuelled by both Urban and Rural involvement.

6. Middlemen elimination: E-Commerce presents an advantage to both consumers and sellers. It eliminates
most middlemen and inventory reduction which makes it easy for a seller to pass on the benefits to
consumers at low prices.

7. Customer Centric: For consumers, easy delivery becomes an advantage with low prices while, on the
other hand for sellers, cross-boundary selling gives multiple benefits, thereby making it a saviour of
search reduction and negotiation costs as well.

8. Better sales: For the farmers, it promises more options for sale. It would increase their access to markets
through warehouse based sales and thus obviate the need to transport his produce to the mandi.

9. Marketing: It has been successfully used by a few enterprising people in agricultural marketing. For
instance, Big Basket, amazon, books orders from online consumers and delivers sorted and cleaned
groceries, vegetables and fruits to them.

10. Accessibility: It helps by providing an accessible nationwide market for the farmer with equal prices for
the quality of his produce.

Farmer Producer Organisations involvement is required to give it a multi vibrant market presence. Agri-
marketing can benefit immensely from e-commerce in both B2B and B2C markets. While e-NAM is the
government driven government has promoted private players such as Big Basket to fill the gap of the B2C
market through policy initiatives like direct purchases and e-trading. E-retailers engagement with FPO’s
may bridge technological gaps and bring more effective and general use of technology. Giving consumers
a quality out-put and farmers and retailers a far better pric