Opportunities for setting up of Food Processing Industry in
Tamil Nadu
Manimaran G V
Retd. Banker
Food processing is the transformation of any naturally available raw products out of agriculture, Animal husbandry or pisciculture etc., into consumable and edible food in one form or other.
Food processing envisages many forms of processing techniques with standardised procedures from grinding grain to make raw flour to be used in small level domestic consumption to complex industrial methods and even adding additives and preservatives to improve the consumption value and long shelf life so as to make even the consumption is an experience.
Such food processing techniques and adoption of such activities play an important role even in reducing food waste and thus resulting in guarding environmental safety and security.
Introduction:
The agricultural sector of Tamil Nadu contributes 12% to the economy and provides livelihoods to around 40% of its population. Tamil Nadu is India’s leading producer of mangoes, bananas, turmeric, papayas, rice, maize, sugarcane, coconuts, groundnuts, cashews, beans, and grapes. It is the largest producer of tapioca and tamarind, second largest producer of poultry and eggs, third largest producer of tea and coffee, and fourth largest in marine fish production.
The major cultivation of crops in Tamil Nadu is Food Crops (Paddy, Maize, pearl millet, jowar, Tapioca, Bengal gram, Horse gram, Red gram, Green gram, and Black gram), Cash crops (Groundnut, Gingili and Sugarcane) and Plantation Crops (Coconut).
The Horticulture crops grown in Tamil Nadu areclassified into six categories viz., fruits, vegetables, spices and condiments, plantation crops, flowers and medicinal and aromatic plants.
A. Agro products
1. Major fruit crops are Banana, Mango, Citrus, Grapes, Guava, Sapota, Papaya, and Pineapple. These are grown in 2,93,146 Ha mainly in districts like Krishnagiri, Dindigul, Thirunelveli, Vellore , Theni, Erode, Trichy, Thiruvallur, Dharmapuri and Madurai.
2. Major Vegetable crops grown are Tapioca, Onion, Tomato, Potato, Brinjal, Bhendi, Drumstick, beans and Carrot in an area of 2,26,502 Ha mainly in districts like Namakkal, Salem, Dharmapuri ,Trichy, Thiruppur ,Dindigul, Erode,Villupuram, Krishnagiri , Perambalur , Nilgiris and Theni Districts.
3. Important Spices and Condiments grown are Chillies, Turmeric, Tamarind,Coriander , Pepper ,Cardamom and Cloves in an area of 1,45,559 Ha. in districts like Ramnad, Thoothukudi, Erode , Salem , Virudhunagar, Dindigul, Dharmapuri and Sivagangai Districts.
4. Tea, Coffee, Rubber and Cashew are the important Plantation Crops grown in an area of 2,32,988 Ha in Districts like Nilgiris , Ariyalur, Cuddalore, Kanyakumari , Dindigul , Coimbatore , Pudukottai and Salem.
B. Livestock products
1. As per 20th Livestock census, 2019 India’s livestock population consist of cattle 193.46 million, buffaloes 109.85 million, sheep 74.26 million, goats 148.88 million, pigs 9.06 million, camel 2.51 lakh, horses 3.42 lakh and total poultry 851.81 million.
2. Tamil Nadu, possessing 4.56% of India’s livestock population, contributes 4.39% to country’s milk production and 7.88% to meat production.
3. The State produces 18.29% of the total eggs produced in India, next to Andhra Pradesh (18.67%). As a result, the State contributes 5.29% to the total value of output from livestock.
4. The contribution of livestock sector to the Gross State Value Added (GSVA) is 5.47% and that to the Agriculture and allied activities is 45.62%. During 2011-12 the gross value-added estimate (at current prices) of livestock which was Rs.26,179.44 crore in the state increased to Rs.78,744.09 crore during 2018-19.
5. The estimated milk production, which was 54.74 Lakh Metric Tonnes (LMT) during 2005-06 in Tamil Nadu, increased to 83.62 LMT during 2018-19
6. Likewise, the estimated egg production which was 62,225 lakh numbers during 2005-06 has increased to 1,88,422 lakh numbers during 2018-19.
7. The estimated meat production (including poultry meat) which was 1,18,616 MT during 2005-06 increased to 6,33,802 MT during 2018-19.
Presence of Food Processing Industries in Tamil Nadu
With total food grain production regularly exceeding 10 mn MT, the state is home to over 24,000 food processing firms classified as MSMEs as well as 1,100 medium and large units. It is ranked 2nd in terms of food processing units & contributes around 8% to India’s national food processing output.
Food Processing Sector
Food processing sector covers
a. fruit and vegetables
b. spices
c. meat and poultry
d. milk and milk products
e. alcoholic beverages
f. fisheries
g. plantation
h. grain processing and
i. other consumer product groups like confectionery, chocolates and cocoa products soya-based products
j. mineral water
k. high protein foods etc.
Food Processing and its Classifications:
Food processing encompasses all the steps that food goes through from the time it is harvested to the time it arrives on consumer’s plate. According to FAO (Food and Agriculture Organization), processed foods can be classified into three types viz. Primary, Secondary and Tertiary.
1. The primary processing includes basic cleaning, grading and packaging as in case of fruits and vegetables.
2. Secondary processing includes alteration of the basic product to a stage just before the final preparation as in case of milling of paddy to rice.
3. Tertiary processing leads to a high value-added ready-to eat food like bakery products, instant foods, health drinks, etc.
Why Food Processing?
1. Traditional food processing had two functions: to make food more digestible and to preserve food during times of scarcity as most crops are seasonal. By processing food, it can be customized to suit the nutritional requirements of groups such as the elderly, pregnant women, infants, young children and athletes.
2. Modern food processing has three major aims:
a. To make food safe (microbiologically, chemically).
b. To provide products of the highest quality (flavor, color, texture)
c. To make food into forms that are convenient (ease of use)
Classification Under Food Processing Activities
Food processing is defined as transforming agricultural products into food that are in consumable form or transforming one food item into another by adding value to it. Based on physical properties of the final product, the Ministry of Food Processing Industries categorises food processing under two sub-categories,
1. Manufactured processes, whereby the original physical properties of the product undergo a change through a process [involving employees, power, machines or money] and the transformed product is edible and has a commercial value.
2. Other value-added processes where the product does not undergo any manufacturing process, but gains significant value addition like increased shelf life, shelled and ready for consumption, etc. Depending on the type and extent of value addition, it is categorised as primary and secondary processing.
Primary processing relates to conversion of raw commodity to one that is fit for consumption. It involves steps such as drying, threshing, cleaning, grading, sorting, packing, etc.
Secondary processing involves creation of value-added products like bread, wine, sausages, etc. The large-scale commercial production of ready to eat food items has brought in another category to food processing, tertiary processing
Investible projects:
1. Fruits and vegetables: preserved, candied, glazed and crystallized fruits and vegetables, juices, jams, jellies, purees, soups, powders, dehydrated vegetables, flakes, shreds and ready-to-eat curries.
2. Food preservation by fermentation: wine, beer, vinegar, yeast preparation, alcoholic beverages. Beverages: fruit-based, cereal-based.
3. Dairy: liquid milk, curd, flavored yogurt, processed cheese, cottage cheese, Swiss cheese, blue cheese, ice cream, milk-based sweets.
4. Food additives and nutraceuticals.
5. Confectionery and bakery: cookies and crackers, biscuits, bread, cakes and frozen dough.
6. Meat and poultry: eggs, egg powder, cut meats, sausages and other value-added products. Fish, seafood and fish processing – processing and freezing units.
7. Grain processing – oil milling sector, rice, pulse milling and flour milling sectors.
8. Food preservation and packaging: metal cans, aseptic packs.
9. Food processing equipment: canning, dairy and food processing, specialty processing, packaging, frozen food/refrigeration and thermo-processing.
10. Consumer food: packaged food, aerated soft drinks and packaged drinking water. Spice pastes.
11. Supply chain infrastructure – this niche has investment potential in food processing infrastructure, the government’s focus is on supply chain related infrastructures like cold storage, abattoirs and food parks.
12. The establishment of food parks – a unique opportunity for entrepreneurs, including foreign investors to enter in the Food Processing industry in India.
13. One District One Focus Product (ODOFP) programme cover products of agriculture and allied sectors for 728 districts of the country.
The Factors Responsible For Driving the Food Processing Industry are:
1. India’s demographic profile with 65% of population below 30 years of age
2. Fast changing consumption patterns
3. Increase in disposable incomes of the people
4. Fast increase in the number of working women, who prefer the packaged food
5. Growth of organised food retail in India
6. 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
7.
General Policies on Food Processing Industries of TamilNadu Government:
1. Promoting innovative measures for fostering group Cooperation in adoption Pre and post harvested Technologies.
2. Changing the cropping pattern and adoption of high tech agriculture for quality produce to meet the requirements of food processing units
3. Speedy development of infrastructure to promote food processing industries.
4. Removing statutory legal hurdles affectinggrowth of food processing industry and introducing new provisions to facilitate food processing.
5. Facilitating financial assistance two entrepreneurs considering the high-risk factor and capital-intensive nature of the industry
6. Creation of reliable Information Network, data Bank etc., so as to provide the entrepreneurs suppliers and buyers necessary information and service under one roof.
7. Adopting an integrated and coordinated approach in respect of allied sectors such as, agriculture, horticulture, floriculture, aquaculture and animal husbandry activities.
8. Upgrading processing standards by introduction of mechanised cleaning, sorting, grading of agriculture produce and providing facilities for establishing integrated cold chain within the state for perishable products like vegetable, fruits, poultry, meat, dairy products, etc., Marine Products and processed foods.
Government Initiatives for Food Processing Industry:
A. 100% Foreign Direct Investment in Processed Food Businesses.
With a view to promoting strategic partnerships in the Indian food processing sector, the government has allowed 100% FDI in businesses dealing in processed foods. Indian brands can benefit from a foreign player’s technology in manufacturing and processing.
B. Food processing is also recognised as one of the 25 areas of focus under Make in India, hence the automatic approval route is open to foreign partners looking for investment in India’s food business.
Government of India’s Incentives and Initiatives
1. PM Kisan Sampada Yojana
➢ This scheme is aimed at promoting entrepreneurs in setting up food processing units, closer to agricultural areas.
➢ Development of cold storage facilities, specialised packaging units, warehousing facilities, etc and other preservation facilities are eligible for grants under the scheme.
➢ The scheme provides a grant in aid of 35% of the eligible project cost in most states and 50% of the project cost in North-east and Himalayan states.
➢ The development of agricultural facilities under the scheme intends the benefits investors, entrepreneurs, farmers, farmer organisations, and agriculture cooperatives.
2. Creation of Mega Food Parks
➢ A mega food park is an integrated facility that provides for storage, processing. Additionally, value additions to a large number of players in the food processing industry. Under the Mega Food Park Scheme, the Government of India provides financial assistance up to Rs. 50.00 Crore per Mega Food Park project.
➢ Most food parks have the following services – tetra-packaging, food testing laboratories, drying chambers for spices and agricultural produce, cold storage, warehousing, packaging and printing facilities.
➢ Thus, the food park provides financial incentives to investors. It also provides convenience to processors and companies utilising its facilities, in addition to generating employment and better services.
3. Operation Greens
➢ In the budget 2018-19, the government announced the Operations Greens scheme to promote integrated value chain development for crops. They are tomato, potato, onion.
➢ Post-harvest processing facilities will be eligible for a grant in aid of up to 50% of the project cost. It also subjects to the maximum limit of 50 crores
4. Prime Minister’s Formalization of Micro Food processing Enterprises
➢ This scheme aims at helping small micro-units engaged in the food processing industry.
➢ Many businesses at the grass-root level such as chilli drying, spice packaging, pickle, and papad making engage directly with farmers.
➢ Recognising the role of such micro-units, a 35% subsidy can be availed. It is by such units on their project cost, up to a maximum of ₹10 lacs
5. Production-Linked Incentive (PLI) Scheme
➢ PLI Scheme for Food Processing Industry was approved by the Cabinet on 31.3.2021 for implementation during 2021-22 to 2026-27 with an outlay of INR 10,900 cr.
➢ Products - Ready to Eat / Ready to Cook (RTE/ RTC) Marine Products Fruits & Vegetables Mozzarella Cheese Innovative & Organic Food Products including free-range poultry egg & meat
➢ The scheme is meant for Indian companies and subsidiaries of MNCs operating in India with minimum sales of food products manufactured in India.
➢ The objective of the scheme is to support the creation of global food manufacturing champions; support Indian brands of value-added food products in the international markets; increase employment opportunities for off-farm jobs and ensuring remunerative prices of farm produce and higher income to farmers.
➢ Under PLI Scheme for Food Processing Industries issued an EOI from prospective beneficiaries and total of 165 applicants registered and activated for submission of application.
➢ No company will get more than 25% of the total budget for the segment and no company will get less than 5% of the segment outlay.
Conclusion
Thus to conclude that huge scope is available in Tamilnadu in setting up of a food processing industries in view of the huge infrastructural and raw material resources. With abundant skill available with the youth of Tamilnadu, the interested and qualified individuals are requested to examine the potential further to establish the food processing industries in Tamilnadu as it has got the following comforts too to make the food processing industries as technically feasible and financially viable.
1. The Government has allowed 100% FDI in the food processing industry and has also sanctioned cold chains to help farmers harvest from being wasted.
2. By allowing 100% FDI, the government aims to attract foreign players and allow them to sell only those products that are ‘Made in India’.
3. This will not only help consumers get fresh produce but also help boost the nation’s economy.
4. Food processing is a sector that is growing by leaps and bounds year on year. It is estimated that in India, the food products export business has the potential to grow by over 50 to 60%
5. Government of India has various schemes under different bodies (NABARD, MOFPI etc) to provide financial assistance to set up food processing facilities.
6. There is a possibility to avail upto 45% subsidy on the project from these agencies depending on the location of the project.
7. More over one can also import the best of machinery and equipment at Zero% import duty if you are exporting your produce.
8. Besides, the institutional finance is available treating the industry as priority sector.
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MANIMARAN G V
RETD. BANKER
06th Dec 2021
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