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    The document outlines several key constraints in the growth of India's food processing sector, including high costs of raw materials, lack of scale, high packaging and logistics costs, lack of infrastructure like cold chains and storage, seasonality of operations, and socio-cultural preferences. Effective supply chain management is needed to minimize costs and waste from farm to consumer. Upstream requirements include incentives for farmers, seeds, fertilizers, machinery, cold storage, and transport infrastructure to ensure a steady supply of raw materials. Downstream needs include credit, skilled labor, technology, food testing labs, quality standards, and organized retail to reduce costs and intermediaries. Major challenges include these issues across the supply chain.

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    Food-Processing-sector-Supply-chain-management-Upstream-and-downstream-requirements

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    The document outlines several key constraints in the growth of India's food processing sector, including high costs of raw materials, lack of scale, high packaging and logistics costs, lack of infrastructure like cold chains and storage, seasonality of operations, and socio-cultural preferences. Effective supply chain management is needed to minimize costs and waste from farm to consumer. Upstream requirements include incentives for farmers, seeds, fertilizers, machinery, cold storage, and transport infrastructure to ensure a steady supply of raw materials. Downstream needs include credit, skilled labor, technology, food testing labs, quality standards, and organized retail to reduce costs and intermediaries. Major challenges include these issues across the supply chain.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    4 views5 pages

    Constraints in The Growth of Food Processing Sector

    Uploaded by

    AWS DEVELOPER
    The document outlines several key constraints in the growth of India's food processing sector, including high costs of raw materials, lack of scale, high packaging and logistics costs, lack of infrastructure like cold chains and storage, seasonality of operations, and socio-cultural preferences. Effective supply chain management is needed to minimize costs and waste from farm to consumer. Upstream requirements include incentives for farmers, seeds, fertilizers, machinery, cold storage, and transport infrastructure to ensure a steady supply of raw materials. Downstream needs include credit, skilled labor, technology, food testing labs, quality standards, and organized retail to reduce costs and intermediaries. Major challenges include these issues across the supply chain.

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    © All Rights Reserved
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    of 5

    Constraints in the growth of food processing sector

    • High cost of raw material (due to low productivity and poor agronomic practices)
    • Lack of scale
    • High cost of packaging
    • High logistics cost
    • Lack of infrastructure (High cost of power, lack of cold chains, storage, handling and transportation)
    • Seasonability of operation
    • Low per capita income
    • Socio-cultural factors such as preference for freshly cooked products as compared to packaged
    products
    • Price differential between fresh and processed food in India is very high.
    • More than a dozen food laws under several Ministries govern food sector.
    • In the long and fragmented supply chain, right from farm to mandi to processor to distributor to
    retailers, there are too many points of intermediation & disconnect.
    Supply chain management
    Supply chain is a network between a company and its suppliers and customers.

    Following becomes part of Supply chain of food product from farmers to consumers.
    • Farmers/Suppliers of Raw Material
    • Food Processing unit (convert Raw material into Finished goods)
    • Transporter
    • Distributors/Wholesalers
    • Retailers
    • Consumers

    Supply chain management is the handling of the entire production flow of goods- starting from the
    access of raw material from suppliers to delivery of final product to the consumer.

    Effective supply chain management systems minimize cost, waste and time.
    Upstream Requirements (Towards Suppliers for uninterrupted supply of Raw Material)

    • To ensure that agriculture produces sufficient food, farmers need the right incentives, knowledge, and
    technology.
    • Availability of High yielding varieties (HYV) of seeds
    • Availability of Fertilizers
    • Latest Farms Machinery
    • Farm power availability
    • Affordable credit
    • Cold chain and preservation infrastructure at farm level. e.g. Cold Storage, Controlled Atmosphere
    (CA)/Modified Atmosphere (MA) storage, Deep Freezer.
    • Reduction in logistics cost (Development of Transport infrastructure)
    • Require amendments in State APMC Act regarding direct procurement from Farmers (reduction in
    intermediaries)
    • Reduction in import duty on inputs
    Downstream requirements

    • Affordable credit
    • Skilled Manpower
    • Modern technology/machinery
    • Food Testing Laboratories
    • Standardisation of Food quality and safety norms
    • Rationalization of tariff and duties.
    • Reduction in logistics cost (Development of Transport infrastructure)
    • Marketing & distribution except by big companies is largely unorganised and fragmented. Fragmented
    retail structure are associated with low product quality, lack of variety and low hygiene.
    • Organised retailing reduces number of intermediaries and transaction costs and thus making it
    cheaper for consumer. It enables processors to test market their products effectively
    • Current distribution structure is risk averse and hence inhibits stocking new products.
    • R&D in food processing for product and process development
    Food Processing Sector–Major Challenges:
    Ministry of Food Processing Industries has identified six key challenges faced by the food processing
    industry:

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