Food Processing Industry News From around the World.

India to create up to 350 food processing units in next 100 days, sector seen as key to economic growth

The Indian Government has unveiled ambitious plans to help set up as many as 350 food processing units over the next 100 days as part of what it calls the country’s Evergreen Revolution.

The Ministry of Food Processing Industries (MoFPI) said it is also planning to invest one trillion rupees (€14bn) in the sector by 2015 in a bid to create as many as 10 million new jobs. Minister Shri Sahai declared he wanted to more than treble India’s food processing industry over the next five years and double its share of global trade to three per cent.

Food processing key

The government declared it wanted to put promotion of the food processing industry at the heart of its plans to revitalise India’s agricultural sector and drive the economy.

“The Ministry believes such growth will transform India by making agriculture viable, ensuring inclusive growth and reducing mass poverty,” said an official statement

Sahai added: “After the Green Revolution, we are now ushering in the evergreen revolution in the country. Processing is an evergreen activity. It's the key to the agricultural sector.”

Training programme

The start ups would take in processing from across the food sector, including meat, fruit, vegetable, dairy, grain and the consumer food segment. MoFI said it would provide a subsidy of up to 25 per cent - up to a maximum of five million rupees – of the initial costs.

Sahai said there was an urgent need for 100,000 trained workers and revealed proposals to bring a further one million on-stream by 2015, along with 500,000 women entrepreneurs. He added the first phase of the National Institute of Food Technology, Entrepreneurship and Management (NIFTEM) would also be inaugurated over the next 100 days to act as a key training institution to provide the skills for the burgeoning industry.

Tax holiday

The government also said it had plans to commission two integrated cold chain projects within 100 days and the initial processing unit in the country’s first Mega Food Park - one of 10 such proposed processing hubs over the next two years.
The minister reiterated his desire for the government to grant a tax holiday for all food processing units, as well as a reduction in VAT and customs duties on food products, raw materials, machinery and packaging used by the sector.

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Innovative ingredients unlock opportunities in Indian bakery market

Manufacturers of bakery ingredients such as enzymes, shortenings, and improvers have "to ratchet up levels of innovation" to drive higher margins and unlock opportunities in India's thriving bakery segment, say market analysts.

Frost & Sullivan predicts that the Indian bakery industry is expected to grow by a healthy 8 per cent rate from 2010 onwards.

But the market, devoid of import entry barriers, is tough for local ingredients manufacturers.

"Norms set by the government for products such as bread have increased the bargaining power of end users, reining in revenues in the bakery ingredients market," said Frost & Sullivan analyst B. Maheshwari.

According to the market analysts, although local makers have an advantage in many ingredient markets, the threat from imports 'looms large'.

The Indian market is devoid of entry barriers for imports, with local manufacturers competing against major global players such as Denmark's ingredients giant Danisco and enzyme supplier Novozymes.

Speciality ingredients manufactured abroad are, according to Frost & Sullivan "higher in quality compared with domestic products."

Compounding the situation for local producers are soaring inflation rates in India and rising manufacturing costs that "are eating into profits."

Building a strong health portfolio

"Innovation offers a route to higher margins for ingredient manufacturers," says the analyst.

In pace with the galloping health trend, Frost & Sullivan suggests that "the production of novel, high-quality products offers the edge over competition."

The thriving Indian bakery industry is still in the developing stage, offering huge opportunities for the bakery ingredients market to grow alongside.

In their analysis of ingredients applications for the Indian bakery industry, according to Frost & Sullivan the market will nearly double in seven years from revenues of over $161.4 million (€125m) in 2007 to $278.1 million (€216m) in 2014.

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Separate policy and R&D boost for Indian food processing sector

Formulation of a separate policy for food processing and a targeted R&D programme to boost processing and packaging technologies are two of the latest proposals unveiled by the Indian government for the sector.

The move comes as part of a concerted effort by the government to transform the industry into a major engine for economic growth.

Policy summit

Minister for Food Processing Industries Subodh Sahai said the government was planning to call a meeting of state food processing ministers after the current parliamentary session closed to canvas their views on drawing up a separate policy formation process for the food processing industry.

“Our ministry will also chart a roadmap for scaling up R&D activities in the sector,” he added.

The backbone of the new policy would be the development of private-public partnerships (PPP) aimed at increasing the commercial orientation of R&D activities. Industry participation in R&D would be encouraged to ensure projects would be more likely to be driven by business-related demands.

Sahai said: “It will turn the spotlight on technical capacity building for research with the ultimate aim of increasing the processing of perishables from the 2007/08 level of 10 per cent to 20 per cent by 2015 and raise the value addition of agricultural produce from 25 per cent to 35 per cent.”

Industry-oriented R&D

Development of new cost-effective methods in the fields of food preservation and packing were two priority areas of research, added the minister. Also key were advancements in innovative products and the utilisation of energy-efficient processing. Research would need to focus on the entire value chain; from producers to packaging, storage and distribution. Companies engaging in relevant R&D projects would benefit from tax incentives, he further announced.

Sahai, speaking at food processing workshop organised with the Federation of Indian Chamber of Commerce and Industry FCCI), specifically highlighted the need for the new research to tackle the enormous problem of food wastage in the Indian system.


“It is regrettable that at a time when the entire world is concerned about food security, India was wasting 50 per cent of its food due to a lack of food processing capabilities,” he said

He noted that wastage of agricultural produce had been reduced by around 15 per cent in recent years but that some Rs500bn (€7.3bn) of produce was still lost annually through spoilage.

Sahai re-iterated the government’s aim to create 500,000 women entrepreneurs in the sector by 2015.

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Indian food processors set for growth

India’s food processing sector is poised for significant growth, according to management consultants A T Kearney.

Despite being a leading food producer, little is processed or exported, underpinning the nation’s big potential for growth, said the report’s authors.

“International attention is now increasingly focused on the rapidly growing food processing sector,” said the report. “Though there is tremendous potential in the food processing industry, it needs strong and dependable technologies and chain facilities to support the increasing production of various perishable products.”

Joint ventures

Both American and European food companies are looking towards starting joint ventures with Indian food industries for export and import of food products and beverages and processing.

The report identified particularly strong growth in demand for processed foods, gourmet foods, health foods, frozen foods, bakery items, ready-to-eat delicacies, fruit drinks and beverages.

In order to fully exploit processing and export potential, Indian food processors will have to implement international safety and quality standards, said the report’s authors.

Growth in India’s food sector is fueled by the phasing out of agricultural subsidies in developed countries under the World Trade Organisation agreements and the rationalisation of tariffs and trade restrictions on food items. “Countries like India will have access to larger export markets and make them more price competitive in international markets in both processed and fresh produce,” said the report.

The report estimated Indian food and beverage retail sales at $135bn with an annual growth rate of 10-15 per cent. India produces 41 per cent of the world's mangoes, 28 per cent of tea, 23 per cent of bananas, 24 per cent cashew nuts, 36 per cent of green peas and 10 per cent of onions.

Leading producers

The nation, which has a current population of about 1,130m, is the world’s largest producer of milk, its second largest producer of food grains and fruits and vegetables. It is also one of the world’s leading producers of meat, poultry and marine products.

Determined to develop its food processing sector at a faster pace, the Indian ministry of food processing industries has launched a strategy intended to double the size of the sector to Rs 8,20,000 crore by 2009-10 and treble it to Rs 13,50,000 crore by 2014-15.

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Clinton backs Indian food processing industry expansion

The upsurge in the Indian food processing industry continues as US secretary of state Hillary Clinton backed government expansion plans and the groundwork was laid to bring overseas expertise to the sector.

Speaking at the National Agricultural Science Centre in Mumbai yesterday, Clinton said the United States wanted India to expand its food processing output and what she called “value added agriculture”.

Key role for India

Her comments came as she told a group of Indian politicians and scientists that the development of India’s agriculture sector was key to providing global food security. She pledged the US government’s support in continuing collaboration over investment in science to increase crop yields but also to bolster the country’s infrastructure to ensure food travels from farm to fork in the most efficient way possible.

“We have to work together, because it's imperative that we invest in the science that will increase crop yields, that we do more to link farms and markets so that farmers can sell their products, that we expand the export of technology and training to bring more assistance to farmers in vulnerable communities,” she said.

US support for food processing boost

Clinton praised India’s experience of agriculture as “unsurpassed” and that “with only three percent of the world's crop land, India feeds 17 percent of the world's people”.

She added: “We want to improve agricultural productivity. We want to get more of the agricultural dollar into the hands of the farmer. We want India to do more food processing and value-added agriculture. And we are going to be working with India very closely.”

Clinton’s speech echoed sentiments expressed by Indian food processing minister Shri Sahai who recently launched a 100-day action plan to open up to 350 food processing plants to kick-start the sector. He also reaffirmed the government’s goal of trebling the food processing industry’s worth to $215bn by 2015.

“The food processing industry, a sunshine sector of the Indian economy, is the key to transforming India by making agriculture viable and market-driven, ensuring inclusive growth and reducing mass poverty,” said Sahai recently.

Memorandum of Understanding

In a separated development, the Indian Institute of Crop Processing Technology signed a Memorandum of Understanding (MoU) in the last few days with a leading Canadian university to collaborate on research and training programmes.

Sahai said the agreement with the University of Manitoba was significant as it paved the way for a broader-based partnership to specifically with the Ministry of Food Processing industries for development on a whole range of processing-related issues.

A statement from the ministry said: “There is a need to prepare a more comprehensive and broad-based MoU between the Ministry of Food Processing Industries, Government of India and Government of Manitoba to cover critical issues pertaining to Food Safety and Quality, Food Technology, Food Fortification and Nutrition, Incubation Centres to develop more industries locally and create more employment.”

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Cash injection to help Indian food processors compete abroad

The Indian Government has backed a scheme to boost research and a promote a slew of internationally recognised food safety practices in a bid to help the processing sector compete abroad.

The Cabinet Committee on Economic Affairs (CCEA) announced today its approval for a R250 crore (€36m) scheme started in 2007 designed to allow domestic processors to compete in the international market place. The programme is split into four sections.

Programme details

Research and Development will look to develop new products and new cost effective technologies for preservation and packaging for food products. It will also cover standardization of various factors such as colouring agents, preservatives, pesticides residues etc.

Setting up and upgrading of quality control procedures including extra funding for food testing laboratories has also been earmarked. This will involve the establishment of a surveillance system for monitoring quality and composition of food, analysis of samples received from food processing industries, and other stakeholders, reduction in time of analysis of samples by reducing transportation time of samples.

Implementing recognised control systems including Hazard Analysis and Critical Control Points (HACCP), ISO 22000, ISO 14000, as well as Good Hygiene Practices (GHP), and Good Manufacturing Practices (GMP).

It is hoped the adoption of such quality systems will prepare the sector “to face global competition in international trade in post WTO regime, and enable adherence to stringent quality and hygiene norms”, said a government statement.

Marketing campaign

Promotional activities to improve awareness about the India food processing sector, attract investment and familiarise existing and prospective entrepreneurs with modern production and packaging were also announced.

“The Scheme will benefit all stakeholders and help the Indian industry keep abreast technologically of international best practices and prepare them to face international competition,” said a CCEA statement.

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Netherlands seeks Indian food processing partners

Joint ventures in food processing and food retailing are planned by the Netherlands in India’s eastern and north-eastern states - providing it can find partners able to comply with international safety standards, according to the publication Business Standard.

Speaking at the Agro Protech 2009 trade event, staged at Kolkata embassy agriculture counselor, Hans Wolff said: “The East and North-East states in India have growth potential in food processing and related sectors, and Netherlands being one of the global leaders in these sectors, can become investment or joint-venture partners with interested companies.”

Food safety standards

But, in order to become more competitive in the global food and agricultural industries, India needs to improve its product quality and maintain international food safety standards, he warned. It should also improve its infrastructure and logistics facilities.

Support for improving distribution systems came from Anisur Rahaman, minister responsible for rural development, government of West Bengal. More joint ventures and public private partnerships would help to improve both the quality and quantity of agricultural production, he said.

Naren De, minister for agriculture, government of West Bengal, said achieving 4-5 per cent growth in the agriculture sector depended on innovation. "Hybrid, high-yielding seeds and other modern agricultural technology inputs must reach the farmers, and a second green revolution is the call of the hour," said De.

The Indian Government has targeted the food processing sector as a major economic engine for growth. It has pledged to boost the domestic industry across all segments as well as encouraging joint ventures with foreign partners.

Food processing

Meanwhile, German company M/S Cancun Food Produces Limited plans to invest $4.5m in a new food processing unit in Bangladesh, reports Bangladesh Economic News.

The facility, to be owned by the Germany company, will employ nearly 400 people and be sited in the Adamjee Export Processing Zone, near Dhaka.

An agreement has been signed between Bangladesh Export Processing Zones Authority (BEPZA) and Cancun Food Produces Limited.

BEPZA is the government organization responsible for promoting and facilitating foreign investment in the export processing zones.


French help for Indian food processing sector

France has offered expertise and technology to help India develop its food processing sector and improve its food safety infrastructure.

Anne-Marie Idrac, French Foreign Trade Minister, tabled the proposals and stated that the Indian agro-food showed huge potential that had yet to be tapped.

She said that India currently processed just three per cent of its total agricultural output and 35 per cent of its dairy produce - compared to a headline figure 70 per cent in France.


India’s food processing industry faced a number of challenges including the need to improve infrastructure, packaging, quality control and testing facilities, said the French minister, speaking at an interactive session organized by the Confederation of Indian Industry (CII).

“We have been through all that in France. Our companies’ experience and expertise can probably help you,” added Idrac.

The minister, who was heading up a delegation from France that included business leaders, said French firms were eager to forge partnerships in India as part of a move to strengthen ties between the Franco-Indian agro-food sectors. Later this year an Indian food processing delegation will visit Paris and have meetings with various French food processing companies, said Idrac.

French food park

She suggested that France and India set up a joint working group that should focus on co-operation between public and private agencies on issues such as policy framework and standardisation of food safety, quality and traceability guidelines. Studies should also be undertaken on the supply cycle methods of crops and cattle to processed food and links developed between research institutes in the two countries.

Indian Minister for Food Processing Subodh Kant Sahai backed closer ties with France in food processing and called for the setting up of a joint quality laboratory of international standards.

He said there was scope to set up a complete food park with French technology that could act as a successful business model for the whole country, said a CII statement.

“We have the raw material, you have the technology,” said Sahai. “India is in the middle of two big markets – the Middle East and the Far East – and we can help French companies reach out to these markets.”


Indian PM calls for national food processing strategy

India urgently needs a national food processing policy which incorporates tax breaks for the sector, the nation’s Prime Minister Manmohan Singh told a conference of state food processing ministers this week.

In a speech made in New Delhi and televised by, Singh said: "The policy to be effective will have to be comprehensive and adopt a number of legislative, administrative and promotional measures.’

The policy should evolve through discussions between the states and industries.

“It should promote the development of viable agri-business and agro-industry models based on different agro-climates and regions," he said.

Simplify the tax structure

Central to his plan was the introduction of a simplified tax structure to stimulate the food processing industry.

“I recognize we need to look at the tax structure,” said Singh. “Primary agricultural commodities are mostly exempt from taxing but processed foods are subject to multiple levies. There is an urgent need to rationalize and simplify the tax structure [for processed food].”

This, Singh hoped, would bring India’s low level of food processing in line with other nations. The country currently has a food processing level of about six per cent, compared with up to 80 per cent in the developed countries and more than 30 per cent in most other Asian and Latin American countries, he said.
Properly primed for growth, the food processing sector would become the engine of growth not just for the food sector but for the wider economy, said the Prime Minister.

"The food processing sector has undoubtedly the potential to be an industry driver that can transform India's rural economy."

Despite global recession, the food processing industry in India grew at an impressive 14.7 per cent in 2008-09, he added.

Perishable commodities

In addition, Singh highlighted the need to cut the wastage of perishables commodities from the present level of 50 per cent and to invest in research and development.

The latest policy initiative is intended to build upon the government’s Vision 2015 – Strategy and Action Plan launched in 2005.

This programme aims to double India’s share in the world food processing market to three per cent; lift the level of processing of perishables from six per cent to 20 per cent; and raise value addition of such products from 20 per cent to 35 per cent.


Indian processed foods should be tax free, says Assocham

Processed foods and primary agricultural products, such as rice, atta and dal, should be classified as tax free when the government introduces its Goods and Service Tax (GST) next year, urges the Associated Chambers of Commerce and Industry of India (Assocham).

Its president, Dr Swati Piramal made the plea to the Union Finance and Food Processing Ministries. Zero-rating such products will be essential if the government wants to achieve its aim of increasing the national level of food processing to 10% from the current level of 2%, he added.

The organization believes that as the nation’s food processing and agricultural industries are poised for significant growth, both sectors will contribute indirectly to tax revenues. This will take the form of taxes on inputs, such as packaging-materials, food ingredients, plant and equipment and technology inputs.

Processed food products

The government should also introduce the new taxes in a sympathetic manner with uniform classification of all processed food products. Organizations which operate in various states should be allowed single registration and the ability to make payments at one central location with the aid of electronic form filling and payments.

In contrast to foods, certain processed items, such as tobacco products and alcoholic beverages, should be taxed at higher rates to make up the shortfall arising from zero rating processed foods and primary agricultural products, said Assocham.

India is the globe’s second largest producer of food commodities including fruits and vegetables, milk, wheat, rice and spices. But the nation’s processing sector accounts for only about 2 per cent of production compared with 88 per cent in the UK, 65 per cent in the US and 27 per cent in China.

Packaging materials

The food processing sector in India is known to have a big multiplier effect in terms of allied trades and industries. For every person working in food processing, about 100 people are said to work in related sectors such as agriculture, post-harvest handling, storage, transportation, packaging materials, food ingredients, fuel, utilities and distribution.

India plans to introduce the GST on April 1, 2010. It will include both a central and state GST applying uniformly to all taxable goods and services.

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