Wednesday, November 21, 2012


A major advantage for big food processing companies is their deep pocket and their ability to innovate using in-house R&D facilities and experienced food professionals. In sharp contrast a small entrepreneur with limited cash in hand faces a huge risk in setting up a venture even under best of the conditions. In a country like India bank financing may be some what easy provided banks are convinced that one has a viable project with low risk. But most entrepreneurs find it difficult to get either the appropriate technology or some minimum hands-on experience for ensuring success after establishing the venture. Here is where the concept of an Incubation Center becomes relevant for the growth of food processing industry. In many countries of the West there are specialized incubation centers catering to diverse interests and food processing incubation centers are also working successfully escorting the entrepreneur till the venture starts production in its own facilities. For an incubation center to be successful there are several pre-requisites which include state of the art equipment and supporting facilities, a good knowledge about food processing, experienced food experts with networking background, closeness to a major food industry cluster and above all a commitment to stand by the entrepreneur till success is achieved. Here is a critique on the importance of incubators in the development of industry.

At many specialty incubators, the goal is more about economic bootstrapping than building the next technology blockbuster. Encouraging entrepreneurship among the poor is a common theme. For instance, La Cocina, a culinary incubator in San Francisco, helps immigrant women with low incomes get food businesses off the ground. First-time entrepreneurs need plenty of guidance with the intricacies of opening restaurants and packaged food businesses. Azalea Perez Olivares, events coordinator and spokeswoman for the food nonprofit, said that the reality check comes during regular informational orientations held before anyone can submit their applications. The message is deliberately sobering. "We try to be realistic—that the majority of food businesses fail," she says. Staff and food industry volunteers mentor those who are selected for the program. Participants almost invariably have to rewrite business plans after better researching the competition and learning about the financing needed to turn their idea into a business. After getting the basics in order, the would-be food entrepreneurs can use the incubator's shared kitchen, which has eight work stations over 4,400 square feet. Food-safety regulations require all food businesses to use a professional kitchen, rather than cook at home. The women who go through the program come out with contacts in the food industry that they would probably never otherwise have been able to get. Additionally, buyers from Whole Foods (WFM), the specialty grocery chain, visit to take a look at the food coming out of the program. So far, 13 businesses have graduated, including a pickle maker and a baker of Irish shortbread that's covered in chocolate. A handful have opened restaurants, such as a graduate who originally sold his Japanese rice balls from a cart.

Who can set up incubation centers and are they viable as a stand alone activity bringing reasonable returns on investment are questions for which there are no clear answers under Indian conditions. Will the large industry cooperate with such incubators for providing hands-on experience for new entrepreneurs wanting to take advantage of the facilities? Are the research institutions in public funded universities and under CSIR, ICAR and others are "fit enough" to undertake the challenges? It may be recalled that way back in early 1990s Ministry of Food Processing Industry (MFPI) provided a grant of Rs 5 crore to Central Food Technological Research Institute at Mysore for setting up a Food Engineering Center which could be eventually converted into an incubator but till to date no one knows the fate of this "Center"! If GOI is serious about development of food industry in the country, it has to create a SPV for setting up such incubators in all the states, preferably in areas where knowledge about food and food processing corridors exist side by side. Institutions like CFTRI, DFRL, NIFTEM, Universities where training facilities exist and others involved in food related developmental work, must join hands and pool their resources to set up a number of food business incubators for creating a new generation of small time entrepreneurs that will boost the role of food industry in the national economy..  


No comments: