dr baljeet yadav
TRANSCRIPT
VALUE ADDITION IN FOOD AGRIBUSINESS
CHAIN THROUGH FOOD PROCESSING
Dr. Baljeet S. YadavHead, Department of Food Technology
Maharshi Dayanand University, Rohtak (India)-124001e-mail: [email protected]
• 52% cultivable land compared to 11% world average
• All 15 major climates in the world exist in India
• 46 out of 60 soil types exist in India
• 20 agri-climatic regions
• Largest livestock population
• Largest producer of milk
• Largest producer cereals
• Second-largest fruit and vegetable producer
• Among the top five producers worldwide of rice, wheat, groundnuts, tea, coffee, tobacco, spices, sugar and oilseeds.
• Sunshine hours and day length are ideally suited for round the year cultivation
Significant Opportunity
India as a global sourcing hub
India has huge supply advantages due to diverse agro-climatic conditions and wide
ranging raw material base…
We are among the top few producers of many agricultural commodities in the world…
Yet our share in world food trade is only 1.6%
The post-harvest losses of fruits and vegetables are estimated to be 25 to 40 %, amounting to more than Rs. 30,000 crores…
Yet less than 2 % is processed ! (30 and 80% Thailand and Malaysia respectively)
We have a middle class of 250-300 million people with adequate purchasing power to buy manufactured goods
Yet value addition to agricultural products is less than 7%(23,45 and 188% in China, Phillipines, UK)
More than 220 million tonnes of food grains production
Yet more than 130 million people go to bed hungry every day !
The Indian paradox
Current status of Indian agriculture
Self sufficiency in primary agriculture (green revolution)
Declining contribution of agriculture to GDP
Lower rate of growth of agricultural opportunities in terms of value
both in terms of production as well as on the processing side
Farmers income 1.5%, expenditures 4.5%
Less productivity of Indian agriculture
Low productivity coupled with low value addition, less returns to
farmers
Lack of backward linkage between farmers and processors
Changing trends in agriculture
Subsistence agriculture Agribusiness
Commodity driven market Product driven market
Homogenous group of crops Crop diversification
Cereals grains crops Fruits & vegetables and oilseed crops
Modern food concepts
•Provide heath benefits
•Weight control
•No chemical additives
•Fresh
•Long shelf life
•Safe food
•Require minimal
preparation
•Ready-to-eat form
Eat to live Eat for good looking and well-being
•Functional foods
–Omega 3 fatty acids
–Anti-oxidants
–Flavonoids
•Probiotics and pre-
biotics
•Glycemic Index (GI)
•Low carbohydrate
diets
•Trans fats
•Food allergens
•Acrylamide
Need of another face of agriculture
Need of secondary agriculture (value addition to agro-
commodities)
Significant opportunities
R & D should be refocused on high value crops
Add two to three fold value to primary agriculture
Secondary agriculture is highly complex
Strengthen rural economy
Understanding the concept of value addition
According to USDA ‘value added agriculture occurs whenever a change
in physical state or form of an agricultural product or the adoption of a
production method or handling process leads to an enhancement in the
customer base for the product, a greater portion of the consumers’
expenditure spent on the product accruing to the producer
Increment in value
Money
attributes
Market expansion
LOCATION VALUEFORM VALUE
OWENERSHIP
/POSSESSION
VALUE
INFORMATION
VALUE
TIME VALUE
Adding value to
products,
creating value for
consumers
TIME VALUE
Understanding the concept of value addition
Incremental value, higher price
Nature of certain business relationships among interacting food
business enterprises---- Supply chain
Values-based supply chains
It is a production/marketing strategy driven by customer needs and
preferences
Approaches to value addition: innovation and/or coordination
Agri &
Food
Inputs
SeedsFertilizersAgro-chemicalsAgri-biotechIrrigationFarm MachineryPoultry Feed & EquipmentDairy Feed & EquipAqua & Fishery Feed & EquipmentFood PackagingFood Ingredients
Prodn. and
Warehousing
Food Corporation of IndiaState Warehousing CorporationCentral Warehousing CorporationPvt. WarehousesCold StoragesFloricultureGreenhouses
Logistics &
Distrbn.
PortsReefer TransportCaterers
Trading
Edible OilGrainSpicesFruits & VegMeat/ aquaCommodity Exchanges
Processing
Primary ProcessGrain MillingEdible OilDairyFruits & VegSugarHigh Value ProcessingConfectioneryBakeryBeveragesDairyMeat & PoultryMarine & Fishery
Food
Retail &
Service
Super MarketsHyper MarketsFast Food & Beverage Chains
Numerous sub-sectors across the Agri-value-chain……right from the “Farm gate” to “Food plate”…
In general, food processing is applied for one or more of the following reasons:
preservation, extending the harvest in a safe and stable form; safety; quality;
availability; convenience; innovation; health and wellness; and sustainability
Operation/activity Conventional technology Post harvest technology
Threshing Manual beating and animal/tractor teading
Mechanical threshing with improved design of threshers
Winnowing Manually with ordinary baskets Mechanical winnowing with manual mechanical power
Cleaning Manually operated SUPA Power operated cleaners cum graders
Drying Open yard sun drying Solar dryer and other dryers like FB dryers
Storage Earthen pitchers, mud bins or bag storage
Metal bins with improved designs
Milling Hand and foot pounding, stone grinders
Modern rice, dhal and flour mills
Marketing Selling raw materials middleman of trade at low prices
Value added products directly to super markets/cooperatives
Preparation and utilization Open vessel cooking and traditional food preparations
Solvent extraction of rice bran, pelleted animal feed
By product utilization Direct feed and fuel uses Pressure and microwave cooking, nutritionally balanced formulations
Conventional and improved agro processing operations used in food
processing industry
Typical technologies, processes and operation used in
secondary and tertiary levels of food processing
Traditional • Heating: blanching,
pasteurization, canning, frying
• Refrigeration and freezing
• Drying and dehydration
• Acidification
• Fermentation
• Smoking
• Curing
• Irradiation
• Extrusion
• Modified atmosphere packaging
• Additives
• Food fortification and enrichment
Novel/emerging • Microwave heating
• Ohmic heating
• High pressure processing
• High pulse electric field processing
• Membrane processing
• Supercritical fluid extraction
• Intelligent packaging
• Food nanotechnology
• GM foods
• Functionality food and nutraceuticals
Primarily agri-food based
Very few high value bio-processed product
Food and feed related industries
Bakery and confectionary products
Edible oils and allied products
Dry fruits and nuts
Dried, dehydrated, preserved fruits and fresh vegetables
Milk and milk products
Tea and coffee
Processed foods and snacks
Rice, wheat and pulses
Spices and derivatives
Meat and poultry
Pickles, chutneys, ketchups and sauces
Mineral water, juices and alcoholic beverages
Marine foods
Cattle feed supplements
Present agri based industries in India
Forward and
backward
linkages
Largest manufacturing
sector
Off season food
availability
Enhanced
marketability
Nutritional
improvement
Added functionality
Preserve Health
promoting
compounds
Increased Shelf
life and storage
quality
Food processing
provides
Low Value Addition
47
58
53
42
~70
79
~94
~30
21
~6India
Brazil
Thailand
New Zealand
USA
Comparison of value added in
agriculture and food processing*
Agriculture
Food
processingPer cent
33875
Source:Indiainfoline; Bloomberg
25
Level of Processing across Segments
Segment India Other Countries
Fruits and Vegetables
2.2%
US A (65 %), Philippines (78%)
China (23)%;
Marine 26%
60-70% in developed countriesPoultry 6%
Buffalo Meat 20%
Milk 35% 60-75% in developed countries
• The Food Processing industry currently valued at about US$ 100 billion & is
estimated to grow at 9-12 per cent, basis estimated GDP growth rate of >8 per
cent and increasing disposable income
• Value addition of food products is expected to increase from the current 8 per
cent to 35 per cent by the end of 2025
• Fruit & vegetable processing, which is currently around 2 per cent of total
production will increase to 25 per cent by 2025
•All these developments will need extensive logistics, quality storage and
transportation
Indian Food Processing Industry -Trends
•International players : Entry of International players in food processing and
value added services - Del Monte, Walmart, Carrefour
•New & Innovative Products: Pepsico’s Nimbooz, Aliva snacks, Minute
maid from Coca cola, Maggi Ataa Noodles
•Development of back end - Contract farming, investment in modern storage
•Emergence of third party logistics
Increasing Urbanisation –Lifestyle and Aspirations
Increasing Nuclear Families and Working Women
Increasing spends on health foods
Food Processing Demand Drivers
Changing demographics – Rise in disposable incomes
Demand for Functional Foods
Organised Retail and Private Label Penetration
Industry Growth Drivers - Demand
37
Huge wastage across the supply chain leads to lower level of processing and hence
low value addition…
Field Losses
(Pest, Diseases, Rodents etc))
Pre-Processing
(e.g. inefficient harvesting, drying, milling)
Transport
(e.g. spillage, leakage)
Storage
(e.g. technical deficiencies)
Processing & Packaging
(e.g. excessive peeling, washing)
Marketing
(e.g. spoilage, rotting in stores)
Rich
Countries
– High
losses at a
later stage
in the food
chain
Co
nsu
mer
Pro
du
cer
Field Fork
Wastage by Consumer
(e.g. overeating, food wastage)
Developing
Countries –
Relatively
high losses
in the initial
parts of the
value chain
Functions % age of employees
Procurement 10
Testing and quality 20
Production 55
R&D 1-2
Storage 2-3
Others (sales and others)
10
Educational level % age of employees
Management education 1-2
Food technologists 20
Post graduates 0.5-1
Graduates 10
Diploma holders 2-5
Certificate holders 2-5
10th standard or below 80
Sk
ill g
ap
man
ag
em
en
t
42
Opportunities High domestic demand and supportive policy provides significant opportunities across the
Food Processing value chain…
Financial & Business
Services
Farm Inputs FarmingMarketing/
AggregatorProcessing
Logistics
(Food)
Retail/
Food
Services
Consumer
Product Design
Distribution
MarketingTransport Services/
InfrastructureQuality Control Market Intelligence
Policy Support
Financial & Business
Services
Farm Inputs FarmingMarketing/
AggregatorProcessing
Logistics
(Food)
Retail/
Food
Services
Farm Inputs FarmingMarketing/
AggregatorProcessing
Logistics
(Food)
Retail/
Food
Services
Consumer
Product Design
Distribution
Marketing
Product Design
Distribution
MarketingTransport Services/
InfrastructureQuality Control Market Intelligence
Policy Support
Key
Opportunities
Mega Food Parks
Integrated Cold
Chain
Backward and
Forward Integration
Food Safety
Management
Systems
Training Facilities
B2B Sales
Quality Control Labs
Joint Research
Facilities
Customised Farm
Equipment
43
Recommendations for the Food Processing Industry in India
A Dynamic
Food
Processing
Industry
Processable
variety of
Crops
Increase
Promotional
Activities
R&D emphasis
Support
Backward
Integration
Skilled and
quality human
resource
Market Access
to farmers
Infrastructure
strengthening
Technology
Upgradation
Adding value is the process of changing or transforming a product
from its original state to a more valuable state that is preferred in the
market place.
Greater opportunities for adding value to raw commodities because of
increased consumer demands regarding health, nutrition, and
convenience as well as technological advances
Producers involved with adding value can fetch a larger share of the
food dollar by producing what consumers demand, instead of producing
only raw commodities.
Adding value to products can be accomplished through innovation
and/or coordination.
Adding value to farm products becomes vital for rural growth by
enhancing farm income and providing employment in processing
businesses
Concluding remarks
Concluding remarks
It is not enough merely to increase and conserve the supply of raw
food; it must be conserved against further loss by processing and
be packaged, distributed to where it is needed,
Growing population and rapid urbanization are expected to
continue in the future and, therefore, will shape the demand for
value added products and thus for food processing industry in
India.
India, having access to vast pool of natural resources and growing
technical knowledge base, has strong comparative advantages over
other nations in this industry
There is a huge opportunity to develop S&T capability and R&D in
the sector