ANOTHER "MEGA" DREAM FOR FOOD PROCESSING- A GRANDIOSE "PLAN"

Ever since the Ministry of Food Processing Industry(MoFPI)was established as a Special Purpose Vehicle of Government of India two decades ago, like any other government agency, this set up has been producing reams of papers, often glossy, promising many things and raising visions of a vibrant food industry in the country. It is well known that on a per unit investment food processing sector create more employment provided it is dominated by small and medium scale enterprises. If large scale mechanization is deployed in the processing, the employment content comes down drastically. A look at the past developments, the Indian food industry is increasingly being controlled by Mega companies and MNCs with huge investment and capital intensive foreign originated technologies sidelining the small and tiny sector players. Frequent "declarations" that MoFPI would increase the value addition to agricultural produce, raise the GDP contribution and substantially increase exports is turning out to be mere sloganeering and whatever the country has been able to achieve so far is in spite of the government by the enterprising private players. The latest "Plan" to set up 10 Mega food parks can materialize only if adequate industry friendly environment is provided and just offering subsidies will end up in huge tracts of land being appropriated by big fishes under the garb of establishing food processing units. Here is the grand stand posturing of MoFPI on this grandiose plans.

"The food parks will be built in Andhra Pradesh, Punjab, Jharkhand, Assam, West Bengal, Uttarakhand, Tamil Nadu, Karnataka, Bihar and Tripura. Ministry has introduced Mega Food Parks Scheme (MFPS) to accelerate the growth of food processing industry in the country through facilitating establishment of strong food processing infrastructure backed by an efficient supply chain. Ministry informed that the scheme provides for a capital grant of 50 percent of the project cost in difficult and Institute for Transportation and Development Policy(ITDP) notified areas(with a ceiling of Rs 50 crores). The government is likely to be spent a sum of Rs.488 crore by March 2012 on the scheme for technology upgradation and modernization of food processing industries. A Mega Food Park takes about 30-36 months to be completed. The working group on food processing for the XII Plan has recommended a new centrally sponsored scheme in the form of National Mission on Food Processing (NMFP) proposed with seven components".

It is true that China has achieved lot using the strategy of Mega Food Parks which helped that country as a major exporter of processed foods of all hues at relatively low cost. But this has happened because of extraordinary facilities and support provided by the government there in stead of just "passing on" the money as it is happening in India. A Mega Food Park must be "mega" in size by bringing in many diverse processors from the small and medium scale sector in stead of a few mega companies with very little employment content. In stead of Mega Parks what the country needs is hundreds of functional industrial estates with superb infrastructure and a few common facilities including marketing help. Big companies have sufficient resources to set up their own facilities and do not need any prop from the government. One can only hope better sense will prevail eventually!

V.H.POTTY
http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com

ADDRESSING FOOD PROBLEMS-STILL A FIRE FIGHTING APPROACH?

Government of India, which ever party holds power at any given time, has always indulged in fanciful announcements, mostly crafted by the omnipotent bureaucrats but with no urgency to implement them. Latest to emerge from New Delhi is regarding the grandiose plan to set up a Special Purpose Vehicle (SPV) what ever that means, to "undertake" studies on food problem facing the country. The announcement coming from a junior minister can only raise laughter because the so called SPV will be a lame duck set up with umpteen number of similar groups which have been doing similar studies with no solution in sight for any of the problems faced by the hapless citizens of the country! Have a look at the grandiose statement by the minister which looks ridiculous to most observers familiar with the issues on the food front.

India Government has decided to create a Special Purpose Vehicle to undertake studies of food grain storage, handling and its transport. It will also assess cold chain infrastructure requirements and will endeavour private sector participation in creation of such facilities. A comprehensive study is also being undertaken by the Planning Commission to suggest measures for creation of modern food grain storage infrastructure in the country, according to Prof. K.V.Thomas, Minister for Consumer Affairs, Food & Public Distribution. Inaugurating the national Conference on Policy for Storage of Food Grains the other day, Prof Thomas apprised the audience of steps taken by the Government to create additional storage capacity for food grains in the country. Hes said that his ministry has proposed creation of two million tonnes of additional storage through modern silos. This will be part of about 15 million tones of new storage capacity being created under Public Entrepreneurs Guarantee (PEG) scheme of FCI. Central Warehousing Corporation (CWC) is also creating 10,000 tonnes of temperature control storage facilities on pilot basis, the minister said.

The "Aam Admi" person in this country has every right to question the credibility of a government which callously allows thousands of tons of food grains under its custody to rot inviting wrath from even the Supreme Court! What prevented the government from building up the infrastructure for handling and storage of food grains for so many years though adequate funds are available at its disposal? Technology could not have been the constraint and technical man power is available in plenty. What lacks is the commitment and concern about those who go hungry day and night due to poverty, food inflation and hijacking of PDS by grain mafia, probably in collusion with the establishment!

V.H.POTTY
http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com

A DEDICATED "SPV" FOR FOOD SECTOR?-INDUSTRY BODY'S SUGGESTION

India is a country where there are hundreds of government institutions vested with different functions and responsibilities. Of course after the economic liberalization initiatives in early nineteen nineties, government role in industry development diminished some what though it still had the critical role of policy orchestration to facilitate the growth of various activities that contribute to the national GDP. The birth of Ministry of Food Processing Industry also owes its existence to the new initiatives at that time and is based on the premise that value addition to agricultural crops is the surest way to generate employment in the country. Now that, in spite of the high voltage proclamations of this ministry from time to time, the food industry does not seem to have emerged as a major economic player in the country's developmental trajectory. The industry body FICCI has now come out with a new proposal to create another Special Purpose Vehicle (SPV) to facilitate flow of credits to food processing sector which is claimed to be starved of funds from nationalized banks due to conservative credit policies pursued by them.

"Identifying food processing as a sunrise sector, industry body Ficci has recommended setting up a bank on the lines of the agriculture cooperative, Nabard, and promoting contract farming to boost growth. "The government should establish a national bank on the lines of Nabard to lend credit to food processing industries whose tremendous potential remains untapped," a Ficci report said. The bank will ensure speedy disbursals of the funds to the sector grappling with the issue of lack of access to credit from banks, Ficci said on the basis of a comprehensive survey. Survey-2010 on bottlenecks in Indian Food Processing Industry was conducted on 250 companies. To overcome the long and fragmented supply chain, contract farming can emerge as a significant opportunity for companies, whereby they can create direct farm linkages to source appropriate quality, quantity and varieties of inputs, the report said. It also recommended opening up multi-brand retail to bring in more global investments in the infrastructure and logistics domain. "Multi-brand retail is an easier way of creating ideal environment for the use of modern logistics infrastructure like transportation, hubs, IT, cold chain," it commented. Ficci, which works closely with the government on policy issues, observed that despite food and food products forming the largest consumption category in India involving 21 per cent of the country's gross domestic product, its growth potential remains untapped. Notwithstanding government undertaking several steps, including rationalisation of food laws, setting up mega food parks and allowing 100 per cent FDI in the food processing & cold chain infrastructure, the sector continues to be at a nascent stage, the report said".

NABARD, an institution created for funding agricultural activities has been functioning for decades but does not seem to have improved the lot of farmers dramatically as reflected by rash of suicides of farmers in different parts of the country. Its much touted Kisan Credit Cards provided to over 71 million farmers and over 28000 farmers Clubs in 555 districts are supposed to be a safety net for the rural families but how far these programs have been able to fulfill the original objectives of NABARD is debatable. If this system had worked properly what was the necessity for GOI to write off billions of rupees of loans given to the farmers during its last budget? Before creating another institution like NABARD for exclusive credit flow to food processing sector, GOI must make a review of the functioning of this agency. NABARD is also supposed to be offering credit to small scale food industries in rural areas, though it does not seem to have made any impact.

V.H.POTTY
http://vhpotty.blogspot.com/
http://foodtechupdates.blogspot.com