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Food Processing Industry | Definition, Types & Importance

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Food Processing Industry

Food is a very important part of a civilization. It is characterized by any plant or animal product which is consumed for nutrition and sustenance. Since the collection, preparation and distribution of food has been the very basis of civilization, culture and home, humanity has always recognized the value of preserving food. This preservation of food ensures availability in times of need by means of pickling, salting, drying, etc. Therefore, food processing is a multi-faceted endeavor and has increased importance for an agriculture economy and society like ours. Food processing basically takes harvested crops (or animal products) and adds value to them using different techniques to produce long shelf-life food products.

What is Processed Food?

As defined by the inter-ministerial stakeholder meeting, processed food pertains to the following two processes:
(a) Manufactured Processes: If any raw product of agriculture, animal husbandry or fisheries is transformed through a process (involving employees, power, machines or money) in such a way that its original physical properties undergo a change and if the transformed product is edible and has commercial value, then it comes within the domain of processed food.
(b) Other Value-Added Processes: If there is significant value addition (increased shelf life, shelled and ready for consumption etc.) such produce also comes under processed food, even if it does not undergo manufacturing processes.

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Why Food Processing Industry?

The Food Processing Industry all over the world provides vital linkages between the two important pillars of the economy- agriculture and Industry. Thus, it has a direct impact on the lives of the people as well as the environment. The significance of FPI can be understood through the following points:

(a) Reducing food wastage: United Nations estimates that more than one-third of food is wasted globally. Similarly, NITI Aayog estimated annual post-harvest losses of close to Rs. 90,000 crore. By diverting extra harvest to FPI, this wastage can be curbed.
(b) Reduce malnutrition: Fortification of processed foods with vitamins and minerals raises the nutrition levels of the population. 
(c) Preserve food quality and increase shelf life: By preventing the spoilage due to fungus, bacteria and pests.

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Food processing industries

(d) Employment generation: The FPI sector provides direct and indirect employment opportunities as it is labour as well as technology-intensive sector.
(e) Increasing farmer income: As the demand for processed food increases, so will the demand for raw farm materials, and thus the income of the farmers will increase.
(f) Crop Diversification: With a growing market, farmers will be incentivised to grow a variety of crops, practice mixed farming etc.
(g) Curbs Food Inflation: Since the shelf life is increased, the food is available throughout the year and keep a check on food inflation.
(h) Gender Empowerment: As FPI is related to animal husbandry where 70% workers are women workers.
(i) Increase exports: High-quality food products are valued all over the world, thus bringing in much-needed forex. For eg: India’s Basmati Rice.
(j) Enhances consumer choices: Today, food processing allows food from other parts of the world to be transported to our local market and vice versa.
(k) Curbing Migration: Agricultural resources in India provides employment in rural areas, hence reduces relocation from rural to urban and resolves issues of urbanization.

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Location of food processing industries in India

Food processing sector in India is a composite sector comprising two broad segments viz. organized and unorganized segments. There are an estimated 25-lakh micro food processing enterprises in the country, which are unorganized and unregistered. With 7% of investment in plant & machinery, the unorganized enterprises contribute of 74.3% of employment (a third of which are women), 10% of output and 27% of value addition in the food-processing sector. Nearly 66 per cent of these units are located in rural areas and about 80 per cent of them are family-based enterprises.

food-processing-industry-definition-types-imporance

The organized sector with nearly 40,000 units accounts for 93% of the plant & machinery in the sector, in value terms. This segment accounts for 26% of employment and contributes around 90% of output and 72% GVA. Most of the food processing factories are concentrated in the coastal states due to accessibility to marine food processing. Major coastal states includes: Andhra Pradesh, Maharashtra, Karnataka, Gujarat, West Bengal etc. Major non-coastal states includes: UP, Punjab, Haryana etc.

Supply Chain of the Food Processing Sector

A supply chain is a network between suppliers (farmers) of raw material, company (food processor) and distribution network to market the finished products. Supply chain represents the steps it takes to get the product or service to the customer.

1.  Primary Processing: cleaning, grading, powdering and refining of agricultural produce, e.g., grinding wheat into flour.
2. Secondary Processing: basic value addition, e.g., tomato-puree, ground coffee, processing of meat products.
3. Tertiary Processing: high value addition products like jams, sauces, biscuits and other bakery products ready for consumption.

Upstream and Downstream Requirements

Often, the different stages within the supply chain are referred to as upstream or downstream.

1. Upstream operations

Upstream operations are those in which the materials flow into the organization. This process includes searching for and extracting raw materials. The upstream part of the production process does not do anything with the material itself, such as processing the material. This part of the process simply finds and extracts the raw material. Therefore, any industry that relies on the extraction of raw materials commonly has an upstream stage in its production process.

Upstream requirements include:

(a) Accessibility to raw materials.
(b) Modern extraction techniques.
(c) Good linkages with farmers.
(d) Storage facilities for raw materials like Grains, Meat, and Fish.
(e) Quality testing facilities.
(f) Transport facilities.
(g) Work force

2. Downstream operations

Downstream operations are those in which materials (mostly in the form of finished products) flow away from the organization to the customers. This process involves processing the materials collected during the upstream stage into an ended product. The downstream stage further comprises of the genuine sale of that product to other businesses, governments or private individuals. Downstream process has direct contact with customers through the finished product.

Downstream requirements include:

(a) Latest processing techniques.
(b) Latest processing machinery.
(c) Quality testing facilities.
(d) Organized retail stores for faster distribution.
(e) Work force.

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