Agro-Processing Ecosystem

through Cooperatives

By NAFED
 Introduction
• Food processing sector connects farmer to consumer by
adding value to their produce
• Increase in world’s population, evolution of dietary
preferences, and higher disposable incomes has increased
demand
• The food processing industry is one of the largest
industries in India and ranks fifth in terms of production,
consumption and exports.
• By 2020, Indian Food and Retail market is projected to
touch $ 828.92 bn
Indian Food Processing Scenario

The Sector has received

US$ 7.54 billion worth of
Indian Food and grocery FDI during April 2000 -
market is 6th largest in March 2017
world
Contributes 8.39% GVA
of Agriculture Sector

Contributes 8.8%
GVA of
 Producer Organization– An
Overview
• A Producer Organisation (PO) is a legal entity formed by
primary producers like Farmers, fishermen, rural artisans, etc
• A PO can be a producer company, a cooperative society or
any other legal firm which provides for sharing of
profits/benefits among its members
• PO ensures better income for the producers through an
organization of their own
• FPO is one type of PO where the members are farmers
• FPC is registered under Companies Act
• The ownership of the PO is with its members. It is an
organization of the producers, by the producers and for the
producers
 Key differences between Producer
Companies and Cooperative Societies
Parameter Cooperative Society Producer Company

Registration Cooperative Societies Act Indian Companies Act

Objectives Single object Multi-object

Area of Operation Restricted, discretionary Entire Union of India

Membership Individuals and cooperatives Any individual, group, association, producer of

goods or services

Voting rights One member, one vote, but Government and One member, one vote. Members not having
Registrar of Cooperatives hold veto power transactions with the company cannot vote

Government control Highly patronized to the extent of interference Minimal, limited to statutory requirements
Food Processing in Agriculture Value chain

Input Storage Service Sector Distribution

Common Methods of Food Processing
Fermentation Canning
• Sterilize food by getting it to a temperature of 212-250
• Production of CO2 through anaerobic respiration, also
F, then putting it into airtight containers
produces lactic acid alcohol in the process. Increases shelf life but requires specially treated metal
It improves taste but is a lengthy process •
• cans or glass jars

Irradiation
Dehydration • Uses gamma rays to kill insects, bacteria, fungi, etc. in
• Lowers moisture content to inhibit growth of food products
microorganisms • Gamma rays pass through without heating or changing
• Increases shelf life upto 2 years it, therefore no heat sensitive nutrients are lost in the
process

Blanching
• Briefly scald food to inactivate enzymes that cause
undesirable changes.
• Freezing temperatures required for storage
Trends in Food Processing Industry (1 of 2)
1) Emerging market growth, urbanization, and rising living standards
• Steady growth in emerging markets, urbanization, and rising living standards are
causing a dietary shift to higher-value-added product
2) Changing consumer preferences
• An increasing focus on health (organic and healthier food) is driving
product/menu expansion and the need for higher standards and traceability
3) Increased demand for convenience food
• Increased demand for convenient “on-the-go” food presents a growth
opportunity for the food service sub-sector particularly in emerging markets
Trends in Food Processing Industry (2 of 2)
4) Operational challenges and cost pressures
• Companies are demanding machines that improve operational efficiency, cut
costs, and increase uptimes, leading to new requirements for automation, energy
efficiency, and integrated solutions
5) Advancement of Analytics
• By 2020, some 20 to 30 billion devices are expected to be connected through the
Internet of Things.
• Advanced analytics can also be used during the sales process to help companies
micro-segment their installed base, tailor their pricing, and develop strategy to
avoid margin reduction
Challenges faced by Indian FPOs/FPCs

InadequateLack
access to credit
of Risk Mitigation
Inadequate Market linkages
Mechanism
Lack of access to
Weak Financials
Infrastructure
Lack of Professional
Political Interference
Management

Challenges for
FPO/FPC
Government Initiatives (1 of 2)
• “MAKE IN INDIA” Programme: Food processing sector has been identified as one
of the priority sectors under “MAKE IN INDIA”, an initiative of Hon’ble Prime
Minister of India
• Mega Food Parks Scheme: Mega Food Parks with common Infrastructure
facilities and common processing facilities are being promoted in production
areas
• Integrated Cold Chain (ICC) and Value Addition Infrastructure Scheme: this
scheme promotes integrated and complete cold chain facilities without any break
from the farm gate to the consumer
• Scheme for Creation/ Expansion of Food Processing and Preservation
Capacities: The main objective of the scheme is for promotion of processing /
preservation of agro food products and modernization /capacity enhancement of
food processing units
Government Initiatives (2 of 2)
• Scheme for Creation of Infrastructure for Agro Processing Clusters: the main
objective of the scheme is to create modern infrastructure for food processing closer
to production areas.
• Scheme for Creation of Backward and Forward Linkages: main objective of the
scheme is to create an effective backward & forward linkage for perishable agri-
produce through setting up of primary processing centers / collection centers at farm
gate, distribution hub and retail outlets
• Operation Greens: Major objectives of “Operation Greens” is to enhance value
realization of Tomato, Onion and Potato (TOP) farmers by targeted interventions to
strengthen TOP production clusters and their FPOs, and linking/ connecting them with
the market.
• Technology Upgradation Scheme: Under this Scheme, GoI extended financial
assistance for setting up of food processing units including fruits and vegetables units,
in the form of grants-in-aid to the implementing agencies/ entrepreneurs
Successful Stories
• The Amul corporative was created by Dr Verghese Kurien, who is also known as
the Father of the White Revolution in India. More than 15 million milk producers
pour milk in 144500 dairy cooperative societies across the country.
• Aavin is the trademark of Tamil Nadu Co-operative Milk Producers' Federation
Limited. Aavin procures milk, processes it and sells milk and milk products to
consumers. Today the cooperative has a revenue of Rs. 5994 crores
• Shri Mahila Griha Udyog Lijjat Papad, popularly known as Lijjat, is an Indian
Women cooperative involved in manufacturing of various FMCG goods. Started in
1959 by seven women in Mumbai with a seed capital of only Rs. 80, it had an
annual turnover of more than Rs. 800 crores in 2018. It employees over 43000
women today
Way Forward
• Implementation of Ease of Business in FPOs/FPCs
• Awareness Building among farmers about Govt Schemes
• Institution Development which provides market linkages domestically and
Internationally
• Digital/Analytical enhancement and finding solutions for small and mid-size
organizations
• Technology Awareness program to youths of rural areas
• Making self-sustaining commercially viable business enterprise to reduce the
dependency on Government
THANK YOU
References
• MOFPI Annual Report:
http://mofpi.nic.in/sites/default/files/eng_mofpi_annual_report_2018-19.pdf
• IBEF Report: https://www.ibef.org/industry/indian-food-industry.aspx
• McKinsey on Food Processing & Handling Ripe for disruption:
https://www.mckinsey.com/~/media/mckinsey/industries/advanced%20electronics/our%20ins
ights/whats%20ahead%20for%20food%20processing%20and%20handling/mckinsey-on-food-p
rocessing-and-handling-ripe-for-disruption.ashx
• https://www.wikipedia.org/
• Farmer Producers’ Organizations (FPOs): Status, Issues & Suggested Policy Reforms:
https://www.nabard.org/auth/writereaddata/CareerNotices/2708183505Paper%20on%20FPO
s%20-%20Status%20&%20%20Issues.pdf
• https://www.nabard.org/auth/writereaddata/CareerNotices/2708183505Paper%
20on%20FPOs%20-%20Status%20&%20%20Issues.pdf