According to estimates, 40-50 per cent of the total food produced in India is either lost or wasted because of the lack of adequate supply chain and storage facilities
India ranks among the world’s top producers in most key agricultural commodities. Estimates peg the size of the total food market at $900 billion. Yet, the level of food processing in India, according to experts, is under 10 per cent. The result: Value addition remains low, and food exports are dismal.
Consider this: As a percentage of gross domestic product, India’s agricultural exports
stand at 2 per cent only. For Brazil, it is around 4 per cent. Argentina is around 7 per cent, and Thailand is around 9 per cent, a report by the Confederation of Indian Industry
The only exception here is milk, whose level of processing stands at 35 per cent, according to estimates, thanks to the milk revolution as well as the emergence of co-operatives over the past few decades.
Dairy products — from packet milk to dahi, chaas, butter, ghee, and cheese — are widely available in the country, partly because the distribution by co-operatives as well as that of private-sector players is strong. Plus, competition by organised players has ensured prices of dairy products remain largely affordable.
But for all this, as R S Sodhi, managing director, Gujarat Co-operative Milk Marketing Federation (GCMMF), says, much of what is processed is consumed in the country, leaving hardly anything for exports.
So, where lies the problem? At the heart of the matter is the lack of modernisation in agriculture, resulting in high wastage at the farm gate and beyond, explains Siraj Chaudhry, managing director, National Collateral Management Services, an agri-logistics and services player. Besides, the preference for home-cooked food among Indians has led to a lack of appetite for preserved food, discouraging the domestic processing industry in general. He argues that a lack of scale does not leave much incentive for food processors to export their products.
“The global (food) processing industry is an established business. For us to be able to export our food products, we first need to have a culture of eating processed food. It barely exists here. Besides, there is no national character to our food habits. It changes in every region,” he says.
According to estimates, 40-50 per cent of the total food produced in India is either lost or wasted because of the lack of adequate supply chain and storage facilities. A recent study by the National Academy of Agricultural Sciences says that the lack of access to a decent storage facility contributes significantly to “post-harvest losses” for all types of food in India.
The study says that increasing storage capacity at the village level would not only help in reducing food loss, but would also aid the rural population to be self-reliant. Besides, say experts, good storage facilities can help farmers leverage their produce in many ways, including to look at a staggered sale of their produce to mandis, co-operatives, and local traders. This, in turn, will help in giving domestic food processing a boost, and exports, a fillip.
While the government in May announced a slew of measures including deregulation of agricultural commodities from the Essential Commodities Act, imposition of stock limits for commodities only during emergencies, and giving marketing choice to farmers, not much has been done to address concerns around inadequate supply chain facilities and the lack of a marketable surplus.
Experts say the categories that have picked up in the past few years in terms of food processing include biscuits, noodles, confectionary, ready-to-eat, ready-to-cook, and snacking segments.
Though most of these categories are seeing double-digit growth per annum, led by convenience, greater urbanisation and higher disposable incomes, some segments such as biscuits, for instance, have seen the Covid-19 pandemic increase in-home consumption dramatically.
Varun Berry, managing director, Britannia
Industries, said his company grew ahead of the market during the lockdown months, led by greater consumption of biscuits. Ironically, Indian biscuits are not consumed widely abroad.
Some experts argue that a robust food-export system can only come into the picture when the domestic processing industry is strong.
Local food firms seem to be paying attention to this. Firms such as Nestlé India, ITC, Britannia, and GCMMF
are all investing significantly in their businesses to capitalise on in-home consumption. Analysts expect food companies
to have a good run in 2020-21 led by stay-at-home consumers as well as an uptick in rural areas.