ECONOMIC HIGHLIGHTS
New Delhi, 18 May 2006
Exploiting
World Market
Processed Food Industry NEEDS
A Push
By Dr. Vinod
Mehta
India is the world’s largest
producer of milk, the second largest producer of fruits and vegetables, a major
producer of spices, tea and coffee and large livestock population and vast
marine wealth. In fact, India, one can
say, is almost sitting on a goldmine of processed
food. There is not only a potential vast
domestic market for it but also huge foreign market.
The industry can become a top foreign exchange earner
provided we follow appropriate policies and capture foreign market. The effort is totally indigenous, does not
involve any import of any inputs to any significant extent and with little
investment one can earn lot of hard currency.
The world processed food
business runs into billions of US
dollars and India's
share in it is not even one per cent as of today.
India as a signatory to the WTO
has to open up its economy to imports of agricultural products from all over the
world within a few years time. When the WTO Agreement was signed it was said
that India
stands to gain by the opening of the agricultural sector as the Indian products
will be relatively cheaper than the similar products produced elsewhere. The reasoning was that other countries
especially the developed ones will be forced to eliminate or lower down their
subsidies on agricultural products while the subsidies on products in India are
already much lower than allowed by the WTO.
This is true to a very large extent. The WTO has only opened up the opportunities
to be exploited by us. However, whether India will be
able to exploit this advantage will depend upon a large number of factors. The relatively lower prices, on their own,
will not be of any help unless we
make a sustained effort in the international market and produce goods which are
in demand in those countries. This
implies increase in the productivities of various agricultural products,
improving their quality, tastes, etc., application of highly efficient processing technologies and improving the packaging of
those agricultural products.
Both the developed and developing countries have now
increased their pressure on India to open up its economy to their
agricultural products sooner, as India has comfortable foreign
exchange position. For instance, Malaysia
is keen to increase its export of palm oil while Mexico
is keen to increase its export of soybean oil to India. Australia
and New Zealand are looking
for opportunities to export milk and milk products as well as kiwi fruit to India. The USA is looking for exporting its almonds and
orange juice to India,
which has allowed import of agricultural products but these countries expect
much more.
It must be understood that India will have to open up
its economy to import agricultural produce from these countries sooner or later,
for India cannot afford to ban their entry for as long as India itself is an
exporter of agricultural products (though not up to their level) like basmati
rice, fruits and vegetables, milk and milk products, tea, coffee, spices and so
on. But India is not yet a major player in
these products in the international market even though it has the
potential. Its record of consistency in
quality, adherence to supply schedules is very bad which puts off the foreign
importer.
This is a minus point with our exporters which comes
in our way of tapping export market. Thailand and the Philippines
are exporting Pineapple juice on a large scale for the past several years while
India
is unable to do so in any good measure because of the non-professional attitude of our business
community. How can we enter the
international markets with this kind of attitude?
The Government has already initiated policy measures
to provide boost to the processed
food industry. In the latest budget,
food processing industry has been
declared priority sector; 100 per cent FDI has been permitted through automatic
route, zero excise duty and so on.
Though incentives have been provided in the past to
encourage the growth of food processing
industry yet it is still lagging behind by international standards. With the
new incentives as provided in the budget, the processed
food industry can hope for a big boost.
But there are other minus points. The food preservation technology in
most of the cases is more than two decades old.
Similarly, packaging of the products is much below the international
standards. On the top of it no attempt
has ever been made to develop brand names in foreign countries.
It is only for the past few years that some of the
companies have started marketing their products in the international market
under their brand names. For instance,
till recently the Indian tea was being auctioned in bulk to foreign buyers
rather than selling them in a packaged form.
The Tatas have now started selling packaged Tea in the international
market under its own brand names.
Similarly, the cooperative sector producer of milk and milk products
Amul has also started marketing its product in the international market under
its own brand name. But these are only
few exercises in brand building and
cannot be said to establish markets for Indian agricultural products in a very
big way.
Therefore what the country needs to do immediately is
to chalk out a concrete programme for the development of processed food products industry, so that India can
become a major player in the international market in the next three to four
years.
As a first step India should concentrate on
increasing the productivity of those agricultural products in which it has a
comparative advantage. It could be Basmati
rice or tea or coffee or it could be mangoes or bananas. Some of the energies of our agriculture
research centres should be concentrated on developing high yielding varieties
of these products. In fact Indian
agricultural scientists have successfully
developed a new strain of basmati rice which provides 25 to 30% more yield per
hectare without any compromise on quality or aroma.
The second step should be the development of new
preservative technologies which are of international standards and can prolong
the shelf life of those products without any much refrigeration. For instance, we are producing large number
of oranges including Kino yet 30% of this fruit goes waste as we have not been
able to develop any technology to preserve its juice. Therefore, before bottled orange juice from
Florida (USA) enters the Indian market we must perfect the technology to
preserve the citrus fruit juice in India
so that we can compete effectively the US producers not only in our own
domestic market but also in the international market.
Third step needs to be to improve the food processing technology and bring it up to international
standards. One public sector
organization is engaged in the development of such technologies but it has had
very little impact till date.
Finally, the food processing
industry will have to pay attention to packaging of the
processed food products. At the moment the packaging of most of the
processed food products is so
repulsive such that even if we have very good product to offer it will not sell
in the international market because of its poor packaging.
India has a comparative
advantage in selling its agricultural products at competitive prices in the
international market but it will not be able to capture by itself the vast
international market for various agriculture products without first improving
the quality of its products and its packaging in every aspect. We have a lot to learn in this respect from
countries like Thailand, Philippines and Malaysia which have well
established food processing
industry. We must now move fast enough
to take advantage of our comparative advantage in the agricultural sector.---INFA
(Copyright,
India News and Feature Alliance)
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