• The food industry is unable to increase in farmers’ wages and reducing food waste.
• Instead of farmers, the industry is primarily benefiting from the value-added of agricultural products.

Current Status of India’s food processing sector

• India is among the world’s top producers of many key farm commodities.
• India ranks first in the production of milk; second in that of fruit, vegetables and fisheries; and third in eggs.
• It also produces a variety of health foods and therapeutically important herbs.
• They can be processed into nutritious snacks and other kinds of high-value products for domestic and export markets.
• The gross value added (GVA) of the food-processing sector has surged from 1.34 trillion in 2014-15 to 2.37 trillion in 2020-21.
• The report by the Federation of Indian Chambers of Commerce and Industry indicates that this sector may grow at an even faster pace of around 15 per cent a year from now on.
• Almost $11 billion in foreign capital entered the Indian food processing industry between April 2000 and March 2022.
• Foreign capital entered either directly or through mergers and acquisitions.

Small and micro food-processing units are economically more viable than the larger ones

• Many characteristics of the Indian farm sector that make small and micro food-processing units economically more viable than the larger ones. The notable ones among them are:
• The perishable and seasonal nature of farm produce
• Its scattered availability in small lots
• Paucity of commodity-specific warehousing
• Transportation facilities
• The issues related to product quality, especially in terms of its suitability for processing.

Challenges of India’s food sector Industry

Post-harvest losses

• In India, the post-harvest losses of farm output continue to be rather high up to 40 % in some perishable items.
• In monetary terms, these losses are assessed at 60,000-80,000 crores annually.
• There are various reasons for low growth of farm sector. They are:
• Inept post-harvest handling
• Transportation, storage, and marketing the produce;
• A low level of on farm processing to enhance the value and extend the shelf-life of the harvested stuff
• Lack of direct linkage between growers and processors.
• Hardly 10 % of the farm harvest is subjected to some kind of value-enhancing treatment or processing.
• This level needs to be stepped up at least to 25 % to reduce spoilage, facilitate the year-round availability of seasonal agricultural products, and soften volatility in their prices.

Lacunae in implementation of laws by states

• The obligation of processing units that they get raw materials from markets run by agricultural produce marketing committees acts as a formidable constraint.
• Only some states have done away with this provision by amending their marketing laws to allow direct purchases from farmers.

Logistical infra

• The needed logistics infrastructure is also found wanting in most places.

Government efforts

• The government allowed 100 % foreign direct investment under the automatic route for manufacturing and retail trading, including e-commerce, of food products made in India.
• It has extended the Production-Linked Incentive Scheme to this industry to impart further impetus to its growth.

The two notable government initiatives targeted specifically at promoting small-scale or cottage-level food processing are:

Pradhan Mantri Kisan SAMPADA Yojana

• It aims primarily at creating modern post-harvest infrastructure for value-addition in farm products and their down the-line value-chain.

PM-Formalisation of Micro Food Processing Enterprises Scheme

• It is meant to provide financial, technical, and business support.
• It is for setting up small-scale ventures and the upgrade of the existing micro food-processing units on the basis of the one-district-one-product approach.

Suggestions

• A higher level of processing would also generate additional income for farmers and off-farm employment and entrepreneurship opportunities for rural people.
• The best course would be to promote small-scale and village-level agro-processing units even while continuing to support the organised sector food-processing industry.
• In fact, the small- and medium-scale sectors should get preferential treatment because they directly impact farm incomes.
• Farmers also need to be encouraged to set up mini or micro agro-processing centres, individually or collectively, through cooperatives or farmers’ producer organisations.
• Such centres can have small machines like mini rice mills, atta chakkies, masala grinders, mini feed mills, small dal mills and similar others.
• Such ventures do not require much land or large investment but can yield good income for the ruralites.

As per the ground reality, government needs to put more efforts for the growth of Indian Farm sector. By promoting small-scale Agro and proper logistics infrastructure the problem of farm sector can be improved. The major aim of growth shall be food growers can be processors too.