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GS Paper: GS3-10.Food processing and related industries in India-scope’ and significance, location, upstream and downstream requirements, supply chain management

  • PM Formalization of Micro Food Processing Enterprises (PM FME) Scheme

    The Ministry for Food Processing Industries (MoFPI) has launched the PM Formalization of Micro Food Processing Enterprises (PM FME) as a part of “Atmanirbhar Bharat Abhiyan”.

    Practice question for mains:

    Q.What is the PM FME Scheme? Discuss its potential to neutralize various challenges faced by India’s unorganized food industries.

    PM FME Scheme

    • It aims to provide financial, technical and business support for upgradation of existing micro food processing enterprises.
    • It is a centrally sponsored scheme to be implemented over a period of five years from 2020-21 to 2024-25 with an outlay of Rs 10,000 crore.
    • The expenditure under the scheme would to be shared in 60:40 ratios between Central and State Governments, in 90:10 ratios with NE and the Himalayan States, 60:40 ratio with UTs with the legislature and 100% by Centre for other UTs.

    Features of the scheme

    • The Scheme adopts One District One Product (ODODP) approach to reap the benefit of scale in terms of procurement of inputs, availing common services and marketing of products.
    • The States would identify food product for a district keeping in view the existing clusters and availability of raw material.
    • The ODOP product could be a perishable produce based product or cereal-based products or a food product widely produced in a district and their allied sectors.
    • An illustrative list of such products includes mango, potato, litchi, tomato, tapioca, kinnu, bhujia, petha, papad, pickle, millet-based products, fisheries, poultry, meat as well as animal feed among others.
    • The Scheme also place focus on waste to wealth products, minor forest products and Aspirational Districts.

    Credit facility provided

    • Existing Individual micro food processing units desirous of upgradation of their unit can avail credit-linked capital subsidy @35% of the eligible project cost with a maximum ceiling of Rs.10 lakh per unit.
    • Seed capital @ Rs. 40,000/- per SHG member would be provided for working capital and purchase of small tools.
    • FPOs/ SHGs/ producer cooperatives would be provided a credit-linked grant of 35% for capital investment along the value chain.
    • Support for marketing & branding would be provided to develop brands for micro-units and groups with 50% grant at State or regional level which could benefit a large number of micro-units in clusters.

    Why need such a scheme?

    • The unorganized food processing sector comprising nearly 25 lakh units contribute to 74% of employment in the food processing sector.
    • Nearly 66% of these units are located in rural areas and about 80% of them are family-based enterprises supporting livelihood rural household and minimizing their migration to urban areas.

    Challenges faced

    • The unorganised food processing sector faces a number of challenges which limit their performance and their growth.
    • These challenges include lack of access to modern technology & equipment, training, access institutional credit, lack of basic awareness on quality control of products; and lack of branding & marketing skills etc.
    • Owing to these challenges; the unorganised food processing sector contributes much less in terms of value addition and output despite its huge potential.

  • [pib] Scheme for formalization of Micro Food Processing Enterprises (FME)

    The Union Cabinet has given its approval to a new Centrally Sponsored Scheme – “Scheme for Formalization of Micro food processing Enterprises (FME)” for the Unorganized Sector on All India basis.

    Practice question for mains:

    Q. Discuss the scope and significance of Food Processing Industries in India.  Also discuss how can it benefit India becoming the global food store.

    Background

    • There are about 25 lakh unregistered food processing enterprises which constitute 98% of the sector and are unorganized and informal.
    •  Nearly 66 % of these units are located in rural areas and about 80% of them are family-based enterprises.
    • This sector faces a number of challenges including the inability to access credit, high cost of institutional credit, lack of access to modern technology, inability to integrate with the food supply chain and compliance with the health & safety standards.
    • Strengthening this segment will lead to a reduction in wastage, creation of off-farm job opportunities and aid in achieving the overarching Government objective of doubling farmers’ income.

    Details of the Scheme for FME

    • The Union Cabinet has sanctioned an outlay of Rs.10,000 crore.
    • The expenditure will be shared by GOI and the States in the ratio of 60:40.

    Salient features

    • It will be a Centrally Sponsored Scheme. Expenditure to be shared by the Government of India and States at 60:40.
    • 2, 00,000 micro-enterprises are to be assisted with credit linked subsidy.
    • The scheme will be implemented over a 5 year period from 2020-21 to 2024-25.
    • Cluster approach.
    • Focus on perishables.

    Support for Individual micro-units:

    • Micro enterprises will get credit-linked subsidy @ 35% of the eligible project cost with a ceiling of Rs.10 lakh.
    • The beneficiary contribution will be a minimum of 10% and balance from the loan.
    • On-site skill training & Handholding for DPR and technical upgradation.

    Implementation strategy

    • The scheme will be rolled out on All India basis.
    • Seed capital will be given to SHGs (@Rs. 4 lakh per SHG) for the loan to members for working capital and small tools.
    • Grant will be provided to FPOs for backward/forward linkages, common infrastructure, packaging, marketing & branding.

    Administrative and Implementation Mechanisms

    • The Scheme would be monitored at Centre by an Inter-Ministerial Empowered Committee (IMEC) under the Chairmanship of Minister, FPI.
    • A State/ UT Level Committee (SLC) chaired by the Chief Secretary will monitor and sanction/ recommend proposals for expansion of micro-units and setting up of new units by the SHGs/ FPOs/ Cooperatives.
    • The States/ UTs will prepare Annual Action Plans covering various activities for implementation of the scheme, which will be approved by the Government of India.
    • A third-party evaluation and mid-term review mechanism would be built in the programme.
    • The State/ UT Government will notify a Nodal Department and Agency for implementation of the Scheme.

    Establishment of a National Portal & MIS

    • A National level portal would be set-up wherein the applicants/ individual enterprise could apply to participate in the Scheme.
    • All the scheme activities would be undertaken on the National portal.

    Benefits of the Scheme

    • Nearly eight lakh micro-enterprises will benefit through access to information, better exposure and formalization.
    • Credit linked subsidy support and hand-holding will be extended to 2,00,000 micro-enterprises for expansion and upgradation.
    • It will enable them to formalize, grow and become competitive.
    • The project is likely to generate nine lakh skilled and semi-skilled jobs.
    • The scheme envisages increased access to credit by existing micro food processing entrepreneurs, women entrepreneurs and entrepreneurs in the Aspirational Districts.
    • Better integration with organized markets.
    • Increased access to common services like sorting, grading, processing, packaging, storage etc.

  • Thalinomics: the Economics of a plate of food in India

     

    • The Economic Survey 2019-20 states that affordability of vegetarian Thalis improved 29 per cent from 2006-07 to 2019-20 while that for non-vegetarian Thalis by 18 per cent.
    • Affordability of Thalis vis-à-vis a day’s pay of a worker has improved over time, indicating improved welfare of the common person.
    • The Survey says that food is not just an end in itself but also an essential ingredient in the growth human capital and therefore important for national wealth creation.

    The term ‘Thalinomics’

    • The conclusion has been drawn on the basis of “Thalinomics: the Economics of a plate of food in India” – an attempt to quantify what a common person pays for a Thali across India.
    • Price data from the Consumer Price Index for industrial workers for around 80 centers in 25 States and UTs from April 2006 to October 2019 has been used for the study.
    • Using the dietary guidelines for Indians, the price of Thalis is constructed.
    • The Survey states that across India and also the 4 regions- North, South, East and West- it is found that the absolute prices of a vegetarian Thali have decreased significantly since 2015-16 though the price has increased in 2019.
    • This is owing to the sharp downward trend in the prices of vegetables and dal in contrast to the previous trend of increasing prices.
    • As a result, an average household of 5 individuals that eats two vegetarian Thalis a day, gained around Rupees 10887, on average per year, while a non-vegetarian household gained Rupees 11787, on average per year.

    Shift in Thali dynamics

    • The Survey states that 2015-16 can be considered as a year when there was a shift in the dynamics of Thali prices.
    • Many reform measures were introduced since 2014-15 to enhance the productivity of the agricultural sector as well as efficiency and effectiveness of agricultural markets for better and more transparent price discovery.

  • [pib] Network for Scientific Co-operation for Food Safety and Applied Nutrition (NetSCoFAN)

    Union Health Minister has launched NetSCoFAN, a network of research & academic institutions working in the area of food & nutrition.

    NetSCoFAN

    • The NetSCoFAN would comprise of eight groups of institutions working in different areas viz. biological, chemical, nutrition & labelling, food of animal origin, food of plant origin, water & beverages, food testing, and safer & sustainable packaging.
    • FSSAI has identified eight Nodal Institutions who would develop a ‘Ready Reckoner’ that will have inventory of all research work, experts and institutions and would carry out and facilitate research, survey and related activities.
    • It would identify research gaps in respective areas and collect, collate and develop database on food safety issues for risk assessment activities.
    • The need for identify research gaps in respective areas and collect, collate and develop database on food safety issues for risk assessment activities, will be addressed by NetSCoFAN.
    • The NetSCoFAN directory would be covering detailed information of various heads/Directors and lead scientists of lead and associated partnering institutions.

  • Food Processing Industry: Issues and Developments

    Developments in Food Processing Industry

    The food processing industry in India is increasingly seen as a potential source for driving the rural economy as it brings about synergy between the consumer, industry and the farmer. However, food processing activity is still at a nascent stage in India with low penetration.

    Importance of Food Processing Industry

    • It holds the potential of reducing enormous wastage of agricultural produce in the absence of processing technologies and cold chain facility
    • It is labour-intensive industry, which has the potential to employ 13 million people directly and 35 million people indirectly
    • This will also lead to increase in farm income, generate employment opportunities, foster forward and backward linkage effects, contribute to exports and integrate Indian economy with the rest of world

    What is the magnitude and size of this industry?

    India is strategically located at the centre of the Middle-East and South-East with a long coastal line and easy sea connectivity as well as plenty of raw material for long period which can attract multi-national companies instead of food processing.

    It is the 5th largest industry and has the highest rate of growth as well as a very high employment elasticity. Currently, it accounts for nearly 16% of total employment in the organized manufacturing sector and 32% in unorganized sector.

    What are the factors which can drive this industry?

    • India’s demographic profile with 65% of population below 30 years of age
    • Fast changing consumption patterns
    • Increase in disposable incomes of the people
    • Fast increase in the number of working women, who prefer the packaged food
    • Growth of organised food retail in India
    • Nearly 55% of the total expenditure on an average is spent on food and grocery in rural areas and nearly 40% in urban areas and only 10% of what we grow is processed in India

    What are the challenges faced by FPI?

    • Indifference of policy makers as very little outlays are allocated in Five Year Plans. In the XI FYP, an outlay of Rs. 4000 crore was earmarked out of which significant proportion was not spent
    • The legislation’s like APMC Acts, Essential Commodities Act, etc restricts free movement of commodities
    • Very poor infrastructure i.e. near absence of technologies, incubation facilities, pre-cooling chambers, irradiation facilities, etc < Food Irradiation is a technology that improves the safety and extends the shelf life of foods by reducing or eliminating microorganisms and insects>
    • High tariffs in the form of high excise duties as well as import duties
    • Non-tariff barriers in the form of stringest regulation of laboratory testing, grading, sampling and packaging
    • Lack of entrepreneurship, as 70% of the total value of food processing items manufactured in India is dominated by the unorganised sector
    • Lack of training facilities related to this industry
    • Very low Research & Development
    • Indian agriculture focuses on traditional crops rather than market-oriented agriculure with diversified commercial crops

    What are the Govt efforts to promote this industry?

    XI Five Year Plan: Govt. recognized the potential of this sector and launched Mega Food Park. It also adopted various measures such as modernization of Abattoir (Slaughter houses), modernization of meat shops, upgradation of street food, effective implementation of Food Safety and Standards Act 2006, technology upgradation, entrepreneurship development programme, setting up of training institutes, etc

    Mega Food Park

    These are the parks with state-of-art infrastructure related to all of the facilities required for food processing industry with their captive power plants, transportation and other hygienic facilities to attract food processing units to avail of this infrastructure for manufacturing food-processed items.

    The target was to set up 30 Mega Food Parks, but only 9 came up.

    XII Five Year Plan: There was significant shift in govt. policy towards this industry in XII FYP, as it allocation to the tune of 4-times as compared to XI FYP, with an outlay of Rs. 15000 crore. It also launched National Mission on Food Processing, in the background of the success of National Mission on Horticulture.

    National Mission on Food Processing

    The mission has two main principles: Decentralization and Outreach.

    The mission is totally centrally sponsored and the responsibility of its implementation lies with the state govt., who will have to take initiative in organizing the unorganized food processors into SHGs (Self-Help Group) and provide them training and other facilities. State govt. will have to bring about synergy between agriculture and food processing industries.

    Budget 2016-17

    Govt. has decided to allow 100% FDI in multi-brand retail for food products produced and processed in India will play a catalytic role in leapfrogging Indian economy.

    Future

    It will be the endeavor of policy makers to ensure that food processing industry conform to global standards of health and hygiene and adopt CODEX standards (related to food safety) laid down by Food & Agriculture Organization and WHO, for the protection of consumer health.

    Food processing needs a fillip in the form of better logistics, access to credit, technology indigenisation and implementation of food safety laws.

    Suggested Readings: 
    Untapped potential of food processing – The Hindu
    Food Processing in India – Make in India

  • Food Safety Standards – FSSAI, food fortification, etc.

    Food Safety Regulations in India and the Way Forward

    From junk food bans to street food regulations, FSSAI has been in news all the year round and most notoriously for the Maggie ban! UPSC does not necessarily goes for the most hot topic in news which is the Maggie ban in this context but this whole episode opens up a hitherto unknown organisation to us – The FSSAI.

    And what must a worthy IAS aspirant do? Study the ins and outs of this organisation – food safety regulations – its latest victories and controversies! And that’s not it, one more reason which makes this topic important is the declaration of the World Health Day’s 2015 theme – Food Safety.

    So, what all have been the cases of FSSAI activism this year? For starters, these guys banned junk food in Delhi school canteens!

    1. Acting on a public interest writ petition, the Delhi HC had earlier directed FSSAI to regulate sale of foods high in salt, fats and sugar in and around 50 metres of schools.
    2. Court also directed CBSE to consider including the adherence to these guidelines while giving affiliation to the schools.
    3. The draft guidelines suggested creation of a canteen policy and education program to inform students and parents of link between ‘High in fats, salt & sugar’ (HFSS) foods and non-communicable diseases like obesity, hypertension, diabetes etc.

    But what was the need to do this? Glad you wondered!

    A study published in the noted medical journal Lancet says India is just behind US and China in this global hazard list of top 10 countries with highest number of obese people.

    Fair enough, what about the street food that we devour?

    This is where CSE came in and presented a case for regulation on the street food. They want the agencies to:

    1. Strengthen the implementation and enforcement of the Food Safety and Standards Act (FSS) .
    2. Improve food testing laboratory infrastructure and skills.
    3. The Food Safety and Standards Authority of India (FSSAI) should set maximum residual limits for antibiotic residues in chicken etc.
    4. Set a national level disease surveillance and public alert system.

     

    All this is well and fine but you probably still want to know what happened with the Maggi case? More particularly, what was the issue with MSG (Ajinomoto)!

    Here’s all that we could find on the MSG/ Ajinimoto issue. UPSC Might not ask a direct question but can probably check you on a quick objective (IAS 2016) or you can use this as a quick criticism point on FSSAI’s propensity to escalate issues!

    Some major criticisms that came in the way of FSSAI:

    1. It is time we wake up and work on a science-based approach and move forward rapidly.
    2. If we have periodical evaluation in aviation for pilots, why not for analysts who test our food?
    3. Ideally, scientists should be involved in monitoring at every stage, including sampling protocols, setting standards, and testing and simulation.
    4. The state labs are short of analytical personnel and ill-equipped to perform to capacity as compared to private labs which are approved by FSSAI.

     

    Published with inputs from Sumer.