Agro- Processing Industry in India free essay sample

Table of Contents 1. AGRO-PROCESSING: AN INTRODUCTION3 2. GROWTH OF AGRO PROCESSING SECTOR3 3. GOVERNMENT POLICIES4 4. SWOT ANALYSIS FOR AGRO-PROCESSING INDUSTRY6 5. GOAL 20157 6. ORGANISATION-VAPCOL8 7. PRODUCT: CASHEW-NUT9 7. 1 Cashew industry in India: An Overview10 7. 2 Supply chain of Cashew product marketed by Vapcol11 7. 3 Value Addition Process12 7. 4 Sales and distribution and Marketing of Cashew nut12 REFERENCES13 List of tables Table 1: Agro-Processing Industries in India—Growth, Status and Prospects4 Table 2: Product-Portfolio of VAPCOL9 List of figures Figure 1: Cashew production, consumption, export, import trend 10 Figure 2: State wise domestic production trend11 Figure 3: Procurement channel of Cashew12 Figure 4: Flow chart of Cashew processing12 ? 1. AGRO-PROCESSING: AN INTRODUCTION As per definition, Agro processing is a set of techno-economic activities, applied to all the produces, originating from agricultural farm, livestock, aqua cultural sources and forests for their conservation, handling and value-addition to make them usable as food, feed, fibre, fuel or industrial raw materials. This specific sector has experienced expansion during last five decades, starting with a handful of facilities which were mainly operating at domestic/cottage level. We will write a custom essay sample on Agro- Processing Industry in India or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page If properly developed, agro-processing sector can make India a major player at the global level for marketing and supply of processed food, feed and a wide range of other plant and animal. The scope of the agro-processing industry encompasses all operations from the stage of harvest till the material reaches the end users in the desired form, packaging, quantity, quality and price. Agro-processing is now regarded as the ‘sunrise sector’ of the Indian economy due to its large potential for growth and likely socio economic impact specifically on employment and income generation. While up to 14 per cent of the total work force is engaged in agro-processing sector in developed countries directly or indirectly; in India, only about 3 per cent of the work force is involved in this sector. This reveals vast untapped potential for employment. Our country has diverse agro-climatic conditions and consumer preferences and hence it produces a vast variety of agricultural and livestock materials. The losses in farm produce in India on account of poor post harvest management have been assessed to be of a very high order. The estimated loss includes losses during storage, handling and milling/processing. By adopting proper agro processing technology, the extent of post harvest losses could be brought down to less than fifty percent of the existing level. The 2. GROWTH OF AGRO PROCESSING SECTOR Starting with a small number of processing facilities in 1950-51, a fairly well spread network of processing facilities has been developed in the Country. Agro-processing technology in India has been continuously making steady progress towards modernization. The table mentioned below gives information of the latest development trends in respect of major crops/crop groups. Table 1: Agro-Processing Industries in India—Growth, Status and Prospects Sl. No. CropRecent products, processes, trends and technologies 1Rice Fully automatic modern rice mills Partially cooked/quick cooking rice Breakfast cereals and value-added products Attractive packaging and branding 2Wheat Fully automatic roller flour mills Whole bran wheat flour, Fortified wheat flour Attractive packaging and branding Large number of baked products Automatic chapatti making machines 3MaizeCorn flour-packaged and branded, Baby corn Corn flakes and value-added products including ready-to-eat snacks (salted sweetened) Starch material, corn oil with specific consumer desired attributes Large, automatic corn processing plants Coarse- CerealsValue-added products including breakfast foods extruded fortified tasty products 5PulsesAutomatic processing units for pulses with driers, colour sorters and packaging unit Cold storing of processed pulses Snack foods and other value added products 6SoybeanProduction of full fat soy flour/enzyme active soy flour for bakery and fortified foods Ready-to-eat snack foods Source: agricoop. nic. in Major problems faced by Agro-processing u nits have been: (a) Low capacity utilization, b) Poor recovery of the finished product from the raw materials, (c) Problems of arranging adequate working capital and its management, (d) Low product quality and (e) Unreliable assured power supply. 3. GOVERNMENT POLICIES The Government has formulated and implemented several schemes to provide financial assistance for setting up and modernizing of food processing units, creation of infrastructure, support for research and development and human resource development in addition to other promotional measures to encourage the growth of the processed food sector. The Centre has permitted under the Income Tax Act a deduction of 100 per cent of profit for five years and 25 per cent of profit in the next five years in case of new agro processing industries set up to package and preserve fruits and vegetables. †¢Excise Duty of 16 per cent on dairy machinery has been fully waived off and excise duty on meat, poultry and fish products has be en reduced from 16 per cent to 8 per cent. †¢Most of the processed food items have been exempted from the purview of licensing under the Industries Development and regulation) Act, 1951, except items reserved for small-scale sector and alcoholic beverages. †¢Food processing industries were included in the list of priority sector for bank lending in 1999. †¢Automatic approval for foreign equity up to 100 per cent is available for most of the processed food items except alcohol, beer and those reserved for small-scale sector subject to certain conditions. †¢The Union Commerce Ministry has approved a brand promotion campaign for value-added â€Å"Made in India† cashew being launched in the West Asian market by March end. The campaign, mooted by Cashew Export Promotion Council of India (CEPCI), involves a financial assistance of US$ 344,787 by the Ministry. †¢Full repatriation of profits and capital has been allowed. †¢Zero duty import of capital goods and raw material for 100 per cent export oriented units. †¢Sales of up to 50 per cent in domestic tariff area for agro based, 100 per cent export oriented units is allowed. †¢Government grants have been given for setting up common facilities in agro Food Park. †¢Full duty exemption on all imports for units in export processing zones has been done. Food Safety and Standard Act, 2006 Till the year 2005, thirteen different laws were applicable on the food and food processing sector. †¢FSSA will be aided by several scientific panels and a central advisory committee to lay down standards for food safety. These standards will include specifications for ingredients, contaminants, pesticide residue, biological hazards and labels. †¢The law will be enforced through State Commissioners of Food Safety and local level officials. †¢Everyone in the food sector is required to get a licence or a registration which would be issued by local authorities. Under APMC Act ?Transaction outside the regulated mandis is prohibited by most states. ?The procurement of agricultural produce should not be facilitated directly from farmer’s fields. ?Most states do not encourage direct marketing and Contract Farming. ?The private sectors are not allowed to invest for the infrastructure improvement. ?The purchaser has to be a registered agent at the wholesale market Under Model Act ?There is no compulsion to sell through existing markets administered by the APMC ? This act enables procurement of agricultural produce directly from the Farm Gate ? This act enables contract farming and there is provision for direct sale of farm produce 4. SWOT ANALYSIS FOR AGRO-PROCESSING INDUSTRY 4. 1 Strength: †¢Raw material is available throughout the year †¢This sector is getting support from the government and is being socially accepted as an important area †¢There is vast domestic market for agro processing of different agric products †¢There is vast network of manufacturing facilities all over the country 4. 2 Weakness: There is high requirement of working capital in this industry. †¢The linkages between RD labs and industry are inadequately developed. †¢Remuneration is less attractive for talent in comparison to contemporary disciplines. †¢There is inadequate automation with respect to the information. †¢There is low availability of new reliable and better accuracy instruments and equipments management. 4. 3 Opportu nity: †¢Large crop and material base in the country due to agro-ecological variability offers vast potential for agro processing activities. Integration of developments in contemporary technologies such as electronics, material science, computer, bio-technology etc. offer vast scope for rapid improvement and progress. †¢Opening of global markets may lead to export of our developed technologies and facilitate generation of additional income and employment 4. 4 Threat: †¢This industry might have to face competition from global players †¢Trained manpower is shifting to other industries and other professions due to better working conditions prevailing there. Such shift may lead to shortage of manpower in agro-processing industry. †¢Rapid developments in contemporary and requirements of the industry may lead to fast obsolescence. 5. GOAL 2015 ?Ministry of Food Processing Industries had commissioned a vision document for the growth of FPI sector. ?Processing of perishables is aimed to increase 20 percent. ?Value addition is aimed to increase to 34 percent from the present level of 20 percent. ?Share of agro processing industry in world trade has to be up from 1. 6 percent to 3 percent. 6. ORGANISATION-VAPCOL VAPCOL (Vasundhara Agri-Horti Producer Company Limited) is a Producer Company established under section 581A of the India Companies Act 1956 to market the products produced by its producer members across the country. VAPCOL is a multistate marketing company, which markets its product under the brand name of â€Å"VRINDAVAN†. Vapcol is promoted by BAIF (an NGO established in 1948 by Dr. Manibhai Desai to uplift the tribal farmers of south Gujarat). The products of Vapcol are a result of years of implementation of the Wadi programme initiated by BAIF. Wadi is a comprehensive programme for improving living standards of marginalised families in remote areas. Its mission is to satisfy its customer by providing consistent quality, service at reasonable price and thus provide remunerative prices and market to our producer owners. VAPCOL is engaged in food processing and marketing of fresh and processed fruits, nuts and vegetables produced in the operational areas of the member organisations. VAPCOL is primarily involved in establishing market linkages for various fresh and processed farm produce from the members. VAPCOL also facilitates the support to the member organisations to develop their supply chains, to implement producer oriented schemes and to take up value chain activities. VAPCOL producers group forms a complex of Cooperatives in Gujarat and Vibhags (Division) with no cooperative structure in Maharashtra. The producer groups from other states like Madhya Pradesh, Uttar Pradesh, Jharkhand and Rajasthan are also part of VAPCOL. All the processing units of VAPCOL are spread across the country right from Gujarat, Maharashtra, MP, UP to Rajasthan. Table 2: Product-Portfolio of VAPCOL Product PortfolioMain ingredientsSuppliers and Area Market (Area coverage)Competitors Mango PicklesRaw mango, salt, Spices, Vegetable oilMember cooperatives, Valsad and NasikValsad, Navasari, PunePravin, Mothers Recipe, Nilons, Kamdhenu Mixed PicklesRaw mango, Lemon, Green chilli, carrot, salt, Spices, Vegetable oilMember cooperatives, ValsadValsad, Navasari, PunePravin, Mothers Recipe, Nilons, Kamdhenu Karvanda PicklesKarvanda, salt, Spices, Vegetable oilMember coop, Peint , NasikValsad, NavasariLocal unbranded pickles. Karela/Lemon/B186 PicklesLemon, salt, Spices, Vegetable oilOpen market purchase, Dharampur Market Valsad, Navasari, PunePravin, Mothers Recipe, kamdhenu Kesar Mango PulpKesar Mango, Preservatives, SugarMember cooperatives, Valsad and PeintValsad, Navasari, PuneLarge number of small players Alphanso Mango PulpAlpanso Mango, Preservatives, SugarMember cooperatives, Valsad and PeintValsad, Navasari, PuneLarge number of small players CashewRaw cashewMember cooperatives, Valsad and NasikValsad, Navasari, Pune, MumbaiLocal vendors getting the supply from Konkan region and Kerala Source: OTS study by PRM 31 participants . PRODUCT: CASHEW-NUT Raw cashew nuts grow on trees and a single nut is attached to and hangs below a false fruit or cashew apple. The most significant difficulty in processing cashew nuts is that the hard outer shell, which contains the edible kernel, contains caustic oil which can burn the skin and produce noxious fumes when heated. The oil (referred to commercially as CNS L, cashew nut shell liquid) contains 90% anacardic acid and 10% cardol. Cashew nuts are kidney shaped and brittle which makes it difficult to remove the shell without breakage. Whole white kernels are the highest grade and larger whole kernels fetch higher prices. In actually, a cashew is not a nut. Technically it’s a seed stemming from the bottom of the cashew apple grown on trees. Botanical name of cashew is Anacardium occidentale also known as â€Å"Nature’s Vitamin Pill†. 7. 1 Cashew industry in India: An Overview India is a major player on the cashew world stage. While cashew cultivation originated in Brazil, today cashew is cultivated in Asia, Africa and Latin America. In the year 2000, the total global area under cashew cultivation was around 4,000,000 ha, while the estimated average productivity was around 510 kg per ha and total raw 11 nut production was 1. 8 million tonnes. India is the second largest country in the world cashew economy for area under cultivation as well as production of raw cashew nuts, second only to Brazil. Today cashew is cultivated on around 720,000 ha in India, yielding an output of 450,000 MT and an average productivity of 710 kg/ha. The cultivation of he crop is mostly confined to the western and eastern coastal areas of peninsular India. Kerala is the largest cashew producing states since long back but its share in total production in the country has decreased over the time. And Maharashtra has improved a lot in it cashew production. Production of raw cashew nuts in India Figure 1: Cashew production, consumption, export, import trend over the year from 1970-71 to 2001-02 Source: Based on the paper compiled from various publications of the Cashew Export Promotion Council of India, Kochi Figure 2: State wise domestic production trend Source: Based on the paper compiled from various publications of the Cashew Export Promotion Council of India, Kochi 7. 2 Supply chain of Cashew product marketed by Vapcol After looking at state wise production trend and the procurement area of cashew marketed by vapcol, it seems very strange that its procurement areas are those areas which do not produce cashew much. But it make sense for vapcol to procure the cashew produced in that area as it had been set up for the very purpose of marketing those products produced by the tribal farmers under the Wadi program initiated by BAIF. Procurement Village-level GVMs act as primary producer groups and procure raw cashew from farmers and transport to the nearest cooperative. GVMs do primary grading and sorting, according to laid down guidelines. Figure 3: Procurement channel of Cashew The cooperatives buy the sorted raw cashew at a pre-announced price and pay GVMs accordingly on a fixed date, with a commission per kg of procurement. The GVMs disburse payments to farmers, according to quantities sold. 7. 3 Value Addition Process After procurement of raw cashew from Wadi plot-holders and others at a redetermined price, processing is done in cluster-level cooperatives as follows. Figure 4: Flow chart of Cashew processing Inter-cooperative transfer of raw cashew is practiced to ensure that the processing activities continue beyond a few months in cooperatives where procurement has been inadequate, and to reduce the pressure on new processing centres, where labour may not be skilled enough to process the entire stock of r aw cashew procured. 7. 4 Sales and distribution and Marketing of Cashew nut Processed cashew is sold by cooperatives directly to wholesalers or marketed through the VAPCOL. After deducting marketing charges, it passes on the final price realised to each cooperative. VAPCOL sells cashew to wholesale traders, through its own retail outlets at Kaprada, Dharampur, Pune, and Sutarpada, and to large buyers like TRIFED, Mumbai Grahak Panchayat and Apna Bazaar. REFERENCES †¢Agro-Processing Industries in India—Growth, Status and Prospect R. P. Kachru (Asstt. Director General (Process Engineering), Indian Council of Agricultural Research, New Delhi) †¢http://www. scribd. com/doc/33781119/Agro-Processing-sector-in-India †¢OTS Report of VAPCOL