Demand For Processed Food Items Set To Increase On Bourgeoning Urban And Young Population

With the bourgeoning urban and young population, demand for processed food items in India is set to increase in the coming years. The food processing industry in India needs to gear up to meet the demand by investing in necessary infrastructure, noted a research paper from the Reserve Bank Of India. In the paper titled Food Processing Industry in India: Challenges and Potential, the RBI researchers noted that domestic food processing industry requires a steady flow of raw materials from the producers/farmers meeting specific quality standards and at stable prices.

Farmer producer organisations, by bringing together small farmers and agricultural entrepreneurs, can enhance the opportunity to build more stable supply chain. Besides ensuring steady flow of income to the farmers, greater linkages with industry could also reduce wastages, particularly in perishables. Though India is a major producer and exporter of agricultural produce at raw material stage, only less than 10% of them are processed and traded.

One major reason for this is the large consumer base domestically and having preference for fresh produce over processed food. Slow pace of urbanisation and low labour force participation of women have resulted in the preference for fresh foods at the All-India level. An analysis of corporate data showed that profitability of food processing firms has been either higher or comparable with the levels of other firms. However, the value-added component in food processing firms was found to be lower than other firms operating in the industrial sector. The sectoral credit data suggest adequate availability of credit for the sector.

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