It is ironical that the country which is the third largest producer of food in the world makes headlines all the time for starvation and food poisoning deaths. We produce 601 million tonnes of food. At 132 million tonnes, we are the world's second largest producer of fruit and vegetables. We have more livestock and produce more milk (82 million tonnes) than any other country.
By the end of the 10th Plan, fruit and vegetable production is likely to touch 185-215 million tonnes and milk production 100 million tonnes. Yet food isn't reaching every hungry mouth. The reason is absurdly simple: food and milk are perishables and rot if not consumed or preserved. Less than 2 per cent of India's fruits and vegetables are processed and 40 per cent (Rs 25,000 crore per annum) is wasted at different levels of production, transportation and handling. Only 15 per cent of the organised sector milk produce is processed. The retail sale of raw milk is prone to high bacterial count, a sure health hazard, adulteration and poor shelf life.
Yet governments have traditionally ignored the issue. While agricultural produce incurs no taxes, the moment one processes food to ensure hygiene and preservation, heavy levies are slapped on. No wonder then that a value addition of only 7 per cent happens to produce in India, compared with 23 per cent in China, and 45 in the Philippines.
Little has changed despite the industry's many representations. India needs an investment of Rs 1,40,000 crore in the food chain to increase the processing level from 2 to 10 per cent in the next 10 years. The high investment would, however, depend upon the pace of rationalisation of tax structure, harmonisation of various food laws and public investment in infrastructure like all-weather rural roads, rural electrification, wasteland development, irrigation and market reforms. It is the sheer enormity of the task that may be keeping governments from taking big steps. "But this will promote the vital link between the two pillars of our economy: industry and agriculture," says D.P. Tripathi, senior advisor, Aseptic Food Processing & Packaging Industry Association of India (AFPPA).
AFPPA believes that government encouragement to the food processing industry will improve the rural economy. Food processing has immense employment potential: a Rs 1,000 crore investment creates jobs for some 54,000 people.
"Consumption," says Surendran Menon, marketing director, Tetra Pak, "has tremendous potential with factors like a growing middle class with a changing lifestyle and disposable income, a rise in the number of working women and increase in per capita income, convenience and hygiene consciousness." Milk could be made a component of the mid-day school meal programme and be eligible for central government grants. This would be a win-win situation for everyone, from the consumer and the government, to the farmer and cooperative dairy producers. Food could be cheaper and available. Often farmers sell at poor prices, fearing that the produce would rot. A thriving processing industry could ensure a better price for them. Consumers could be assured of hygiene.
Prior to the budget, the AFPPA had proposed to the government to consider reduction in customs duty on aseptic processing and filling machines from 50.8 per cent to 28, to bring it nearer to the duty structure in countries of Southeast Asia and South Asian neighbours where the duty ranges between 10 and 18 per cent. "But while relief has been provided to the carbonated drinks sector, no relief in customs or excise duty was provided to us," says Tripathi. "Does this mean that the government would rather that Indians drank colas instead of fruit juices?" asks an industry member.
But the cost of aseptically packaged food is considerably higher.A litre of milk costs Rs 25 against Rs 15 for the packets we buy. What sense does that make in a country with a huge population of poor? The AFPPA says that government support could bring down prices considerably. No doubt about that. So what's holding back the decisions?