AGRICULTURE & THE PROCESSED FOOD

SUBMITTED BY:~ Ankita Verma~ Neha Tyagi~ Pankaj Goel

CONTENTS

Overview Production Centers Domestic Industry Trend in Export Major Export Destinations Export from India for last three years Major Competitors in the global market Quality Standards Provisions in FTP Problems / Challenges faced by the exporter Relevant News articles

OVERVIEW India has geographic location, receives good rainfall and proper sun light in

the right proportions as required for good crops. India’s land is agricultural and people are land owners, as well as farmers.

So agriculture news is important for a large population of the country. Agriculture is one of the strongholds of the Indian economy and accounts for

14.6 per cent of the country's gross domestic product (GDP) in 2009-10, and 10.23 per cent (provisional) of the total exports

India ranks second worldwide in farm output.  India’s total export is US $ 7347.07 million in 2009-10 India’s import is US $ 4,438.755 million in 2007-08 There are more than 300 export-oriented units for floriculture. Agriculture, including crop, forestry and agro processing constitutes the very

basis of socio economic lives of India.Source: Apeda, general information, available at http://www.apeda.gov.in/apedawebsite/six_head_product/floriculture.htm as accessed on 2010,

2)apeda, country profile, availabe at http://tradejunction.apeda.com/countrysearchnew/products_imported.aspx?ctryid=99999&ctryn=INDIA as accessed on 2009,3)apeda, export statistics, available at http://tradejunction.apeda.com/indexp/monthexport.aspx as accessed on 2009

4)apeda, Indian data, available at http://tradejunction.apeda.com/indexp/ExportStatement.aspx?val=2, accessed on 2009

5) GOI, agriculture, available at http://www.ibef.org/economy/agriculture.aspx as accessed on 2009

6) apeda,tradejunction available at http://tradejunction.apeda.com/IndImp/SpecAgroProdImportCommodityWise.aspx as assessed on 2009.

 

OVERVIEW Processed foods have been altered from their natural state for

safety reasons and for convenience. Fruit and vegetable juice is also an example of a healthy processed

food. In fact, some orange juice is fortified with calcium to make it even more nutritious. Processed foods and prepackaged meals are very convenient and popular

India’s exports of Processed Food was 2219.533 Million US $ in 2008-9 and 1752.58 Million US $ in 2009-10 i.e 28.12% and 23.84% respectively of total exports.

A number of new initiatives like Technology Mission for Integrated Development of Horticulture in the North Eastern States (TMNE), National Horticulture mission(NHM), National Food Security Mission (NFSM), Macro management in Agriculture (MMA), Rashtriya Krishi Vikash Yojana (RKVY), National Project on Organic Farming (NPOF), National Project on Management of Soil Health and Fertility (NPMSHF).

Source: Apeda, general information, available at http://www.apeda.gov.in/apedawebsite/six_head_product/PFV_OPF.htm as accessed on 2010

PRODUCTS

PROCESSED FOOD Dried & Preserved Vegetables Mango pulp Pulses Ground nut Jaggery & Confectionary Guargum Cocoa Product Cereal Preparation Alcoholic & Non Alcoholic

Beverages Miscellaneous Preparation Milled Products

AGRICULTURE Fruits, Vegetables and their

Products Cereal and Cereal Products Groundnuts, Peanuts and

Walnuts Floriculture and Floriculture

Products Herbal and Medicinal Plants Organic Products

Major Production Centers

FRUITSCOMMODITY STATE Apple Jammu & Kashmir Banana Maharastra Citrus Andhra Pradesh Grapes Maharastra Gauva Jharkhand Litchi Bihar Mango Uttar Pradesh Papaya Andhara Pradesh Pineapple West Bengal

VEGETABLESCOMMOTIDY STATE Brinjal West Bengal Cabbiage West Bengal C flower West Bengal Okra West Bengal Peas Karnataka Tomato Karnataka Onion Maharastra Potato West Bengal S.potato Orissa Tapioca Tamil Nadu

PLANTATION

  COMMODITY STATE Cashewnut Andhra Pradesh Arecanut Karnataka Cocoa Kerela Coconut Kerela

DOMESTIC INDUSTRY The Indian Agriculture Industry is on the brink of a

revolution that will modernize the entire food chain, as the total food production in India is likely to double in the next ten years.

Total food market is US$ 69.4 billion The Government of India has also approved proposals

for joint ventures, foreign collaborations, industrial licenses and 100% export oriented units envisaging an investment of US $ 4.80 billion.

The agricultural food industry employs around 65 per cent of the population.

Source: indiamart, industry overview, available at http://agro.indiamart.com/agro-industry-overview/ as accessed on 2009

DOMESTIC INDUSTRY The other attractive features of the Indian agro industry that have

the capacity to lure foreigners with promising benefits are the milk and milk products, meat and poultry segments

The Ministry of Food Processing Industries (MOFPI) has formulated a Vision 2015 action plan. This includes trebling the size of the food processing industry, raising the level of processing of perishables from 6 per cent to 20 per cent, increasing value addition from 20 per cent to 35 per cent, and enhancing India’s share in global food trade from 1.5 per cent to 3 per cent.

The cumulative FDI received by the food processing industry from April 2000-September 2010 stood at US$ 1,102.03 million.

Source: Apeda, processed food, Available at http://apeda.com/apedawebsite/ as accessed on 2008

STATE DISTRICT/AREA & RESPECTIVE PRODUCTS PRODUCED

West Bengal 1. Darjeeling-Pineapple,Darjeeling Tea

2. Uttar Dinajpur-Pineapple

3. Cooch Behar-Pineapple

4. Jalpaiguri-Pineapple

5. Districts of Murshidabad-Lychee,Mangoes, Vegetables

6. Malda-Lychee,MAngoes

7. 24 Pargana (N)-Lychee

8. Districts of Hoogly-Potatoes

9. Burdwan-Potatoes

10. Midnapore (W) –Potatoes

11. Uday Narayanpur and Howrah-Potatoes

12. 24 Pargana (S)-Lychee, Vegetables

13. Nadia-Vegetables

Tamil Nadu 1) Dharmapuri-Flowers

2) Districts of Madurai-Mangoes

3) Theni-Mangoes

4) Dindigul-Mangoes

5) Virudhunagar-Mangoes

6) Tirunelveli-Mangoes

7) Cuddalore- cashewnut

8) Thanjavur- cashewnut

9) Pudukottai- cashewnut

10) Sivaganga- cashewnutSource: apeda, general information, available at http://www.apeda.gov.in/apedawebsite/trade_promotion/Agri_Export_Zone.htm as accessed on 2009

TRENDS

EXPORTS OF

INDIA

FRUITS & VEGETABLES EXPORTS IN 2006

Source: apeda, international data, available at http://tradejunction.apeda.com/Market%20Profile/Volume_IV/World%20Trade%20Scenario%20of%20Crop.aspx as accessed on 2006

MOST EXPORTED PRODUCTS

INDIAS MAJOR EXPORT DESTINATIONS

Source: Apeda, agriculture trade portal, indian data, exports statistics, Generate your Own report available at http://tradejunction.apeda.com/indexp/genReport.aspx as accessed on 2010

Source: apeda, Indian data(import data), available at http://tradejunction.apeda.com/countrysearchnew/products_imported.aspx?ctryid=99999&ctryn=INDIA as accessed on 2009-2010

Data as accessed on 2009-10Value in US $ million

Source: apeda, Indian data(exports), availabe at http://tradejunction.apeda.com/indexp/ExportStatement.aspx?val=2 as accessed on 2009-10

MAJOR COMPETITORS CHINA: On average, China produces 108,712 TMT of wheat

annually. This makes China the world’s largest wheat producer, producing 42,856 TMT more than India, the world’s second largest wheat producer.

THAILAND: Thailand's agriculture export, world's largest exporter

of rice, export of fisheries products and livestock products, agricultural and food policy, agricultural credit 

UNITED STATES: Agriculture is a major industry in the United States and the country is a net exporter of food. As of the last census of agriculture in 2007, there were 2.1 million farms, covering an area of 922 million acres (373 million hectares), an average of 418 acres (170 hectares) per farm.

Source: U.S. Library of Congress, available at http://countrystudies.us/thailand/67.htm EW, world agriculture, available at http://www.economywatch.com/ as accessed on 2008.

Towns of Export Excellence [TEE]

S.NO. Town of export excellence

State Product category

1. AEKK (Aroor, Ezhupunna, Kodanthuruthu & Kuthiathodu)

Kerala Seafood

2. Kollam (Quillon) Kerela Cashew products

3. Indore Madhya Pradesh Soya Meal and Soya Products

Source http://commerce.nic.in/pressrelease/pressrelease_detail.asp?id=2628

A number of towns have emerged as dynamic industrial Excellence (TEE) clusters contributing handsomely to India’s exports. It is necessary to grant recognition to these industrial clusters with a view to maximizing their potential and enabling them to move higher in the value chain and tap new Markets. Selected towns producing goods of Rs. 750 Crore or more will be notified as TEE based on potential for growth in exports. However for TEE in Handloom, Handicraft & Agriculture threshold limit would be Rs150 Crores.

PROVISIONS IN FTP

VISHESH KRISHI AND GRAM UDYOG YOJANA (VKGUY) (SPECIAL AGRICULTURE AND VILLAGE INDUSTRY SCHEME)

Objective of VKGUY is to promote exports by providing 3% of duty credit of FOB value. All Status Holders shall be incentivised with duty credit script equal to 10% of FOB value of agricultural exports which can be used for duty free import / procurement of capital goods related to infrastructure meant for agro-processing to promote agricultural exports provided that the total benefits for all status holders put together does not exceed Rs 100 Cr (i.e. Rs 50 Cr for each half year). And the products included under this scheme are :

(i) Agricultural Produce and their value added products;

(ii) Minor Forest Produce and their value added variants;

(iii) Gram Udyog Products;

(iv) Forest Based Products; and

(v) Other Products, as notified from time to time.

Instant Tea included for benefits under VKGUY @ 5% of FOB value of exports

Source- http://www.ganatragroup.net/foreigntrade.html#8

EPCG SCHEME

EPCG licences issued to agro units in the agri export zones, a period of 12 years reckoned from the date of issue of the licence would be permitted for the fulfillment of export obligation

The agro units in the agri export zones would also have the facility of moving the capital goods imported under the EPCG within the agri export zone

An LUT/ Bond in lieu of BG may be given for EPCG licence granted to units in the Agri Export Zones provided the EPCG licence is taken for export of the primary agricultural products.

Source : http://pib.nic.in/archieve/ForeignTradePolicy/ForeignTradePolicy.pdf

Duty Credit Scrip Duty Credit Scrip benefits are granted with an aim to compensate high transport

costs, and to offset other disadvantages. Exporters, of products notified in Appendix 37A of HBPv, shall be entitled for Duty Credit Scrip equivalent to 5% of FOB value of exports (in free foreign exchange) for exports made from 2009 onwards.

However, for exports made w.e.f 1.7.09, some Flowers, Fruits, Vegetables and other products, as listed in Table of Appendix7A shall be entitled to an additional duty credit scrip equivalent to 2% of FOB value of exports; over and above the 5% or 3% VKGUY reduced rate entitlement.

 EPCG for agro units LUT/Bond or 15% BG ( as applicable) may be given for EPCG Authorization granted to units in Agri Export

Zones provided EPCG Authorization is taken for export of primary agricultural product(s) notified in Appendix 8 or their value added variants

FOCUS PRODUCT SCHEME (FPS) Objective is to incentivise export of such products, which have high employment intensity in rural and semi

urban areas, so as to offset infrastructure inefficiencies and other associated costs involved in marketing of these products Exports of notified products (as in Appendix 37D of HBP v1) to all countries (including SEZ units) shall be entitled for Duty Credit scrip equivalent to 2% of FOB value of exports for each licensing year commencing from 1st April, 2006.

Oil Meals (Cotton, rape seed, groundnut), Castor Oil derivatives, Packed Coconut Water and Coconut Shell worked items shall be entitled for benefits @ 2% of FOB value of exports to all markets under FPS

FOCUS MARKET SCHEME (FMS) Objective is to offset high freight cost and other externalities to select international markets with a view to

enhance our export competitiveness in these countries. Exporters of all products to notified countries (as in Appendix 37C of HBP v1) shall be entitled for Duty Credit scrip equivalent to 3% of FOB value of exports for each licensing year commencing from 1st April, 2009.

Market Access Initiative Under MAI scheme, Financial assistance is provided for export promotion activities

on focus country, focus product basis. Financial assistance is available for Export Promotion Councils (EPCs), Industry and Trade Associations (ITAs), Agencies of State Government, Indian Commercial Missions (ICMs) abroad and other national level institutions/eligible entities as may be notified. A whole range of activities can be funded under MAI scheme. These include, amongst others,

I. Market studies/surveys,

II. Setting up of showroom / warehouse,

III. Displays in International departmental stores,

IV. Brand promotion,

V. Reimbursement of registration charges for pharmaceuticals and expenses for carrying out clinical trials etc., in fulfillment of statutory requirements in the buyer country,

VI. Testing charges for engineering products abroad,

VII. Assistance for contesting Anti Dumping litigations etc.

Each of these export promotion activities can receive financial assistance from Government ranging from 25% to 100% of total cost depending upon activity and implementing agency.

MARKET DEVELOPMENT ASSISTANCEIt is a scheme to encourage exporters to access n develop overseas markets

i Participation in international trade fairs,

ii. Publicity campaigns

iii. Overseas study tours

90% of the cost of air ticket by economic class and 25% of the cost of publicity material.

AGRI EXPORT ZONES

An Agri Export Zone is a specific geographic region in a country demarcated for setting up agri based processing industries, mainly for export. The term is widely used mainly in India

These zones have been set up for end to end development for export of specific products from a geographically contiguous area. 

Units in AEZ would be entitled for all the facilities available for exports of goods in terms of provisions of the respective schemes

AGRI EXPORT ZONES West Bengal- Pineapple,Lychee, Potatoes, Mangoes , Vegetables, darjeeling tea Punjab- potatoes, vegetables, basmati rice Maharashtra- Grapes&grape wine, mangoes, kesar mango, Flowers Uttar Pradesh- Potatoes, mangoes, basmati rice and vegetables Rajasthan- Coriander, cumin Other states: Uttaranchal, karnataka, Tripura, Bihar, Tamil Nadu, Assam, sikkim,

MP, Orissa, Gujarat, Jharkhand, Himachal Pradesh.

Source: apeda, general information, available at http://www.apeda.gov.in/apedawebsite/trade_promotion/Agri_Export_Zone.htm as accessed on 2009

SINGLE WINDOW SYSTEM To reduce transaction and handling costs, a single window system to facilitate

export of perishable agricultural produce has been introduced. The system will involve creation of multi-functional nodal agencies to be accredited by APEDA

SPS & TBT

WTO Agreements on Sanitary and Phytosanitary Measures (SPS) and the Agreement on Technical Barriers to Trade (TBT) try to strike a balance between these competing uses of standards in international trade.

The SPS and TBT agreements acknowledge that governments have the right to take necessary measures for the protection of human, animal and plant health and allow some freedom for setting national standards to the extent required to protect them.

PACKAGING MATERIALS as TBTTest parameters Methodology Adopted Applicability

Tin, Chromium AAS Tin plate

Sulphide stain Chemical Food cans

Laquer Physical Chemical Tin cans

Migration tests Chemical Food grade plastics

Heavy metals like Pb, As, Cd, Se, Ba,

AAS Coloured plastics

Water vapour permeability Humidity chamber Plastics

Identification of plastic materials

Chemical FTIR DSC Food packaging materials

Physical tests Thickness gaugeUniversal testing machine 

Elmendrof tear tester Dart impact tester

Plastic packages

Source: http://www.shriraminstitute.org/ available at http://www.shriraminstitute.org/food.html

QUALITY STANDARDS

There are two organisations, the Bureau of Indian Standards (BIS) and the Directorate of Marketing and Inspection (DMI), currently dealing with the voluntary standardisation and certification systems in the food sector in India.

According to industry sources, for the processed food sector BIS certification is more important than DMI certification.

ISI MARK The certificate given by Indian Standard Institute, that the commodity is

as per the standard quality & quantity. Every manufacturer has be submit the each lot or batch of production to the quality inspector & he takes some sample quantity for examination. Than the certificate issued to producer, Than the batch despatched to market for sale.

Fruit Product Order (FPO)

Fruit Products Order -1955, was formulated with an objective to manufacture fruit & vegetable products maintaining sanitary and hygienic conditions in the premises and quality standards laid down in the Order. It is mandatory for all manufacturers of fruit and vegetable products including some non fruit products like non fruit vinegar, syrup and sweetened aerated water to obtain a license under this Order

ACTS & REGULATIONS

Prevention of Food Adulteration Act, 1954

Fruit Products Order, 1955

Meat Food Products Order, 1973

Vegetable Oil Products (Control) Order, 1947

Edible Oils Packaging (Regulation) Order, 1988,

Solvent Extracted Oil, De-oiled Meal and Edible Flour (Control) Order, 1967

Milk and Milk Products Order, 1992

Any order under Essential Commodities Act, 1955 relating to food.

Analysis is done as per both National and International Standards with the following major protocols :

» Bureau of Indian Standards» Agricultural Markings» Prevention of Food Adulteration Act» Fruit Product Order» Association of Official Analytical Chemists International» American Association of Cereal Chemists» American Oil Chemist's Society» American Spice Trade Association» American Dry Products Institute» American Public Health Association» SriLanka Standard Institution» In-house validated methods and procedures» Party's specifications

QUALITY SPECIFICATIONS

Source: http://www.shriraminstitute.org/ available at http://www.shriraminstitute.org/food.html

Attribute 

Accept 

Reject

 Colour

 Orange/red

 More than 10% green

 Size

 Any

 -

 Shape

 Any

 -

 Damage- splitting- insect- mould

  

Less than 5%Less than 5%

None

  

More than 5%More than 5%

Any evidence of mould

 Hardness

 Soft to over-soft

 More than 10% hard

Quality attributes for tomatoes used for tomato paste

PROBLEMS/CHALLENGES

India's large agricultural subsidies are hampering productivity-enhancing investment.

Overregulation of agriculture has increased costs, price risks and uncertainty.

Inconsistent government policy. Agricultural subsidies and taxes often changed without notice for short term political ends.

Infrastructural facilities are inadequate Tariffs peaks, tariff escalation, commodity-specific bilateral agreements and

special exemptions remain major issues restricting market access abroad for products

Few Examples: Lack of harmonization of egg products standards in EU member countries

resulting into requirement of approval of production units by individual member countries.

Ban on the import of fresh grapes from India on the basis of report of the incidence of oriental fruit fly on grapes in Pakistan

RELEVANT ARTICLES

Impact of Liberalization on India's Agricultural Exports: A Behavioral and Discriminant Approach.

Comparative Advantage of India in Agricultural Exports. vis-à-vis Asia: A Post-reforms Analysis.

Differences remain over cash for grain. Promoting Sustainable Agriculture in India. Agriculture in India: Issues and Challenges. Global agricultural trade and developing countries.

REFERENCES1. Apeda, general information, available at

http://www.apeda.gov.in/apedawebsite/six_head_product/floriculture.htm as accessed on 2010,

2. apeda, country profile, availabe at http://tradejunction.apeda.com/countrysearchnew/products_imported.aspx?ctryid=99999&ctryn=INDIA as accessed on 2009,

3. apeda, export statistics, available at http://tradejunction.apeda.com/indexp/monthexport.aspx as accessed on 2009

4. apeda, Indian data, available at http://tradejunction.apeda.com/indexp/ExportStatement.aspx?val=2, accessed on 2009

5. GOI, agriculture, available at http://www.ibef.org/economy/agriculture.aspx as accessed on 2009

6. Apeda, general information, available at http://www.apeda.gov.in/apedawebsite/six_head_product/PFV_OPF.htm as accessed on 2010

7. apeda, Indian data, available at http://tradejunction.apeda.com/India%20Production/Result_SearchState.aspx as accessed on 2009-2010

8. indiamart, industry overview, available at http://agro.indiamart.com/agro-industry-overview/ as accessed on 2009

9. Apeda, processed food, Available at http://apeda.com/apedawebsite/ as accessed on 2008

10. apeda, general information, available at http://www.apeda.gov.in/apedawebsite/trade_promotion/Agri_Export_Zone.htm as accessed on 2009

11. http://www.shriraminstitute.org/ available at http://www.shriraminstitute.org/food.html

12 apeda, international data, available at http://tradejunction.apeda.com/Market%20Profile/Volume_IV/World%20Trade%20Scenario%20of%20Crop.aspx as accessed on 2006

13 apeda, Indian data(exports), availabe at http://tradejunction.apeda.com/indexp/ExportStatement.aspx?val=2 as accessed on 2009-10

14 apeda, Indian data(import data), available at http://tradejunction.apeda.com/countrysearchnew/products_imported.aspx?ctryid=99999&ctryn=INDIA as accessed on 2009-2010

15 apeda, products,available at http://tradejunction.apeda.com/prodgallery/prodgallary.aspx as accessed on 2009

16 U.S. Library of Congress, available at http://countrystudies.us/thailand/67.htm EW, world agriculture, available at http://www.economywatch.com/ as accessed on 2008.