FOOD PROCESSING: THE KEY TO GROWTH

For an agrarian economy, food processing has been found to be the key for economic growth. Food has one of the highest economic multipliers of any industry. The food industry is one of the world’s largest employers. For every job in the food sector, many additional jobs are created for retailers, suppliers and other business partners.

Globally, food is one of the first industries to develop scale and importance, whereas in Bihar, it is still negligible. Food processing industry is of enormous significance to Bihar’s development because of the vital linkages and synergies that it can bring about in state’s industrial and agriculture sector. Fast growth in the food processing sector and progressive improvement in the value addition chain are also of great importance for achieving favorable terms of trade for Bihar agriculture. Food Processing transforms agricultural raw materials into safe, convenient, delicious and nutritious products for consumers.

It is a diverse industry that ranges from small and medium enterprises to major multi-national companies. It also helps in reducing wastage and spoilage. The Vision Document 2015 for India estimates the losses due to non–processing to be as high as 35 per cent. In case of Bihar, a research carried out by Rajendra Agriculture University (RAU) estimates the post-harvest losses in case of fruits varies from 15–25 per cent in banana to 30–50 per cent in papaya and in case of vegetables it varies from 17–27 per cent in cabbage to 41–47 per cent in cauliflower. Just the arrest of the losses in fruit and vegetables in the state through processing and post-harvest management will result in an increase in income of Rs 2,000 crore to the economy. The loss in cereal is estimated at Rs 4,500 crore.

Creating the necessary infrastructure for post-harvest handling and food processing will directly increase the farm gate prices, rural income and increased employment. Food processing industries will help in establishing technology linkages, marketing channels besides reducing wastages. Growth of food industry has direct benefits on the lives of farmers and rural workers.

“It is estimated that the incomes of farmers and rural workers increase by an average of 100 to 200 per cent due to establishment of food processing project in a region. Yields increase by 50 to 250 per cent. The potential for employment is high"----- (CII–Mckinsey FAIDA Report)

Bihar already has a few agricultural commodities to cater to niche markets. For a gainful utilization of the existing potential, infrastructure creation and institutional development holds the key.

A decrease in post-harvest losses by just one per cent will result in value addition of Rs 80 crore
to the GSDP (Gross State Domestic Product) by food grains and about Rs 120 crore by the fruit and vegetable sector. Thus, the total value addition to the state GSDP simply by minimising losses to 2 per cent in food grains and 15 per cent in Fruits and Vegetables would lead to a value addition in the GSDP by approximately Rs 2000 crore.

The multiplier effect of investment in food processing industry on employment generation is 2.5 times more than in any other industrial sector. Even within food processing industry, the employment intensity is significantly higher in the unorganised sector as compared to the organized sector for the same level of investment. For every Rs 10 million of investment, 1,050 jobs are created in the unorganised sector against 140 jobs in the organized sector.

Processing, in spite of all the constraints in the state, has a few success stories to show the path for the food processing industry. The Bihar state Cooperative Milk Producer’s Federation (COMFED) is one example and the ‘makhana’ industry is another along with litchi. In fact, COMFED is one of the few success stories of organized milk processing within India. COMFED’s success is based on integrated vertical and horizontal linkages across the supply chain of milk. It provides all the elements of supply chain intervention to its members—up gradation of milk production technology (including milch animals varietal and productivity enhancements), animal health, efficient procurement, storage and processing (using appropriate and latest technology), market linkage etc. COMFED procures 5.75 lakh litres of milk per day through milk unions—the milk procurement has increased by about 8 times from 1991–92 to 2005–06. It processes about nine per cent of the milk processed in the state.