Food processing is a panacea to alleviate the financial stress of agriculturalists. It transforms agriculture through value addition. It has picked up over the years but is not yet as intense as it should be in food surplus areas of the country. The food processing industry (FPI) contributes nearly 14% of manufacturing GDP, though only 10 percent of food is processed. It will reach an estimated turnover of $ 535 billion in 2025, with an annual growth of 11 percent.
The transformation of agriculture through FPI hastens diversification, creates more jobs, enhances farmers’ income, and helps retain the next generation in agriculture. It also reduces the burden on the government to procure food grains, with wider choices for producers and consumers.
Private and public investments in FPI have not been enough to motivate farmers to come out of the age-old input-output functions. Despite better financial results for farmers, these are meagre, with a concentration at the primary level. In recent years, secondary and tertiary processing has also picked up.
Among others, there are socio-cultural and economic reasons for a lesser preference for processed foods. People prefer hot cooked meals, which are considered healthy, safe, and affordable. Processed food is seen as western, though the younger generation packaged in corporate culture may not agree. It is considered low in nutritional density and expensive too.
Fresh food production has increased, making the country self-sufficient and even surplus. It was 275.11 MTs against an aggregate demand of 257.70 MTs in 2017. The agricultural exports were 22.3 million tonnes in 2018. But the country had to import substantial quantities of pulses and oilseeds to balance the food basket of the consumers, and global value chains (GVCs) helped facilitate trade from surplus to deficit economies. It had a positive impact on reducing poverty and hunger.
Food surplus in India is, however, marginal. The country was 97th in OXFAM Food Availability Index and 103rd in the Global Hunger index in 2018. The Economic Survey 2018 stated that per capita per day availability of food grains was 487 grams, down from 510 grams in 1991.
Furthermore, nearly one-fourth of our population still faces poverty and deprivation. The improvement in income and livelihood of the deprived people and the further increase in population will increase the demand for food, leaving perhaps no surplus. The World Bank estimated that global demand for food will increase by 50 percent by 2050.
Notwithstanding the pressures to bridge the gap in demand and supply, the increase in agriculture production and resultant glut in the market increases farmers’ woes. Agricultural produce market price declines with increased supplies at the harvesting, pushing down the net crop remuneration of the farmers. The financial constraints do not allow them to withhold the crops to get the best market value. As per available information, financial distress compelled nearly 14 million farmers to leave agriculture from 1991 to 2011, of which one lakh farmers were from Punjab.
The farmers expect market interventions to ensure a minimum support price (MSP), but a universal or statutory MSP is not feasible. The government’s paradox is to achieve a minimum price for the farmers without making the food unaffordable for the consumers. An attempt in this regard was made through MSP in selective original green revolution areas and by enforcing the PDS for those who deserve subsidised food. The PDS has improved by plugging leakages through technology (e-POS), but the farmers’ unrest and economic distress still worry the policymakers.
The plausible option seems to encourage processed foods that meet the requirements of socio-economic contexts obtained in different areas and regions of the country. The increase in the sale of packaged liquid milk is an example of one such effort. The people in our country prefer to drink hot liquid milk. They boil it for consumption, and chilling and packaging are additional safety measures.
A synergy of traditions and science is thus a clear signal to success. The food processing fully reflecting upon the local socio-cultural requirements without ignoring the affordability measure of different communities is a challenge for an appropriate policy ecosystem. FPI incentives should reduce the marketing agonies of the farmers and encourage contextually relevant processed food.
The public and private investments and the FDI in food processing should increase in food surplus regions. The States with surplus fresh food should receive more public funds for the food processing industries. The investment promotion programs such as Make in India should give greater thrust to large-scale commercial production of processed food in states like Punjab, Haryana, and Western UP. The capacity of young farmers should be enhanced through the national program to promote startups. Second and third-generation farmers should be skilled in farm gate processing.
Under the One-District One Product initiative, farm gate processing units should be encouraged to produce processed food as per local context, choice, taste, and preference. Large global businesses should spearhead such a program in a given area, engaging local youth for gainful employment without dislocating them from their socio-economic milieu.
More synergized efforts in the public and private sectors, ensuring value addition to local crops, will hasten the doubling of the farmers’ incomes, which otherwise remains an unfulfilled dream. Agriculture diversification will reduce the damage happening now due to the non-sustainability of agriculture operations and the challenges emerging from climate change. The employment generation, technology adoption in agriculture, and the skills and capacity of farmers to produce qualitatively better crops for the market will also get a boost, ensuring a new direction for agriculture in the country.