UPSC IAS exam preparation - Indian Agriculture and related issues - Lecture 9

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Herticulture, Animal rearing, Produce management,
Food processing, eNAM - Part 2

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4.0 PRODUCE MANAGEMENT

The farmer has realized the importance of adopting new techniques of production and is making efforts for more income and higher standards of living. Due to this, the cropping pattern today is influenced more by economic considerations and less by subsistence requirements. The farmer usually is not conversant with the complexities of the marketing system which is becoming more and more complicated. The cultivator is handicapped by several disabilities as a seller. He sells his produce at an unfavourable place, time and price.

4.1 Basics of food production management

In order to have best advantage in marketing of his agricultural produce the farmer should enjoy certain basic facilities.

1. He should have proper facilities for storing his goods.
2. He should have holding capacity, in the sense, that he should be able to wait for times when he could get better prices for his produce and not dispose of his stocks immediately after the harvest when the prices are very low.
3. He should have adequate and cheap transport facilities which could enable him to take his surplus produce to the mandi rather than dispose it of in the village itself to the village money-lender-cum-merchant at low prices.
4. He should have clear information regarding the market conditions as well as about the ruling prices, otherwise may be cheated. There should be organized and regulated markets where the farmer will not be cheated by the "dalals" and "aadhatiyas".
5. The number of intermediaries should be as small as possible, so that the middleman's profits are reduced. This increases the returns to the farmers.

4.2 Problems & shortcomings of existing marketing system

Indian system of agricultural marketing suffers from a number of defects. This deprives the farmer from a fair price for his produce. There have been instances globally where though the prices have not decreased at the exchange level, the farm prices have collapsed. This trend points towards presence of a lot of middlemen and the practice of distress selling. The main defects of the agricultural marketing system are discussed here.

Improper warehouses: There is an absence of proper ware housing facilities in the villages. Therefore, the farmer is compelled to store his products in pits, mud-vessels, "Kutcha" storehouses, etc. These unscientific methods of storing lead to considerable wastage. Approximately 1.5% of the produce gets rotten and becomes unfit for human consumption. Due to this reason supply in the village market increases substantially and the farmers are not able to get a fair price for their produce. The setting up of Central Warehousing Corporation and State Warehousing Corporation has improved the situation to some extent

Lack of grading and standardization: Different varieties of agricultural produce are not graded properly. The practice usually prevalent is the one known as "dara" sales wherein heap of all qualities of produce are sold in one common lot. Thus the farmer producing better qualities is not assured of a better price. Hence there is no incentive to use better seeds and produce better varieties.

Inadequate transport facilities: Transport facilities are highly inadequate in India. Only a small number of villages are joined by railways and pucca roads to mandies. Produce has to be carried on slow moving transport vehicles like bullock carts. Obviously such means of transport cannot be used to carry produce to far-off places and the farmer has to dump his produce in nearby markets even if the price obtained in these markets is considerably low. This is even more true with perishable commodities.

Presence of a large number of middlemen: The chain of middlemen in the agricultural marketing is so large that the share of farmers is reduced substantially. For instance, a study of D.D. Sidhan revealed that farmers obtain only about 53% of the price of rice, 31% being the share of middle men (the remaining 16% being the marketing cost). In the case of vegetables and fruits the share was even less, 39% in the former case and 34% in the latter. The share of middle- men in the case of vegetables was 29.5% and in the case of fruits was 46.5%. Some of the intermediaries in the agricultural marketing system are village traders, Kutcha aadhatiyas, pucca aadhatiyas, brokers, wholesalers, retailers, money lenders, etc.

Malpractices in unregulated markets: Even now the number of unregulated markets in the country is substantially large. Arhatiyas and brokers, taking advantage of the ignorance, and illiteracy of the farmers, use unfair means to cheat them. The farmers are required to pay arhat (pledging charge) to the arhatiyas, "tulaii" (weight charge) for weighing the produce, "palledari" to unload the bullock-carts and for doing other miscellaneous types of allied works, "garda" for impurities in the produce, and a number of other undefined and unspecified charges. Another malpractice in the mandies relates to the use of wrong weights and measures in the regulated markets. Wrong weights continue to be used in some unregulated markets with the object of cheating the farmers.

Inadequate market information: It is often not possible for the farmers to obtain information on exact market prices in different markets. So, they accept whatever price the traders offer to them. With a view to tackle this problem the government is using the radio and television media to broadcast market prices regularly. The news papers also keep the farmers posted with the latest changes in prices. However the price quotations are sometimes not reliable and sometimes have a great time-lag. The trader generally offers less than the price quoted by the government news media.

Inadequate credit facilities: Indian farmer, being poor, tries to sell off the produce immediately after the crop is harvested though prices at that time are very low. The safeguard of the farmer from such "forced sales" is to provide him credit so that he can wait for better times and better prices. Since such credit facilities are not available, the farmers are forced to take loans from money lenders, while agreeing to pledge their produce to them at less than market prices. The co-operative marketing societies have generally catered to the needs of the large farmers and the small farmers are left at the mercy of the money lenders.

Thus it is not possible to view the present agricultural marketing system in India in isolation of (and separated from) the land relations. The regulation of markets broadcasting of prices by All India Radio, improvements in transport system, etc., have undoubtedly benefited the capitalist farmers, and they are now in a better position to obtain favourable prices for their "market produce" but the above mentioned changes have not benefited the small and marginal farmers to any great extent.

4.3 Unique characteristics of agricultural produce

Agricultural products differ in nature and contents from industrial goods in the following respects.

1. Agricultural products tend to be bulky and their weight and volume are great for their value in comparison with many industrial goods.
2. The demand on storage and transport facilities is more heavy, and more specialized in case of agricultural products than in the case of manufactured commodities.
3. Agricultural commodities are comparatively more perishable than industrial goods. Although some crops such as rice and paddy retain their quality for long time, most of the farm products are perishable and cannot remain long on the way to the final consumer without suffering loss and deterioration in quality. 
4. There are certain agricultural products such as mangoes and grapes which are available only in their seasons but this condition of seasonal availability is not found in the case of industrial goods.
5. Agricultural produce is to be found scattered over a vast geographical area and as such its collection poses a serious problem. But such is not condition in the case of industrial goods.
6. There are various kinds and varieties in farm produce and so it is difficult to grade them.
7. The farmers especially in countries like India has low holding-back. Therefore he has to sell his produce immediately after the harvest at whatever price he can fetch because of his pressing needs.
8. Finally, both demand and supply of agricultural products i are inelastic. A bumper crop, without any minimum guaranteed support price from the government may spell disaster for the farmer. Similarly the farmer may not really be in a position to take advantage of shortages or deficit crop. These benefits may pass on only to the middleman.

4.4 Methods of sale and Marketing Agencies

The marketing of agricultural produce is generally transacted in one of the following ways.

Under cover or the Hatta System: Under this system, the sale is effected by twisting or clasping the fingers of the seller’s agent under cover of a cloth. The cultivator is not taken into confidence until the final bid is cleared.

Open auction system: Under this system the agent invites bids for the produce and to the highest bidder the produce is sold.

Dara system: Another related system is to keep the heaps of grains of different quantities and sell them at fiat rates without indulging in weightment etc.

Moghum sale: Under this system, sale is based on the verbal understanding between buyers and sellers and without mentioning the rate as it is understood that the buyers will pay the prevailing rate.

Private agreement: The seller may invite offers for his produce and may sell to one who might have offered the highest price for the produce.

Government purchase: The government agencies lay down fixed prices for different qualities of agriculture commodities. the sale is effected after a gradual processing for gradation and proper weightment. This practice is also followed in co-operative and regulated markets.

Marketing agencies: The various agencies engaged in the marketing of agricultural produce can be classified into two categories, viz., (i) government and quasi private agencies like the co-operative societies and (ii) private agencies. A chain of middlemen may be found operating both in Government and private agencies. The more important among these are as follows:-

1. Merchant is the most usual purchaser of the produce, he deals in his individual capacity.
2. Itinerant Beoparis (merchants) visit different villages, collect the produce, and take to the nearest market.
3. Agents are concerned with the assembling and distribution of agricultural produce. 

4.5 Cooperative Marketing

Though the above measures have improved the system of agricultural marketing to some extent, a major part of the benefits has been derived by large farmers, who have adequate marketable surplus. However, the small and marginal farmers continue to sell a major part of their produce to moneylenders to meet their credit needs and these moneylenders offer them very low prices. Therefore it is essential to form cooperatives of the small and marginal farmers to enable them to obtain fair prices for their produce. The advantages that co-operative marketing can confer on the farmer are multifarious, some of which are listed below.

Increases bargaining strength of the fanners: Many of the defects of the present agricultural marketing system arise because often one ignorant and illiterate farmer (as an individual) has to face a well-organised mass of clever intermediaries. If the farmers join hands and for a co-operative, naturally they will be less prone to exploitation and malpractices. Instead of marketing their produce separately, they will market it together through one agency.

Direct dealing with final buyers: In cases, the co-operatives can altogether skip the intermediaries and enter into direct relations with the final buyers. This practice will eliminate exploiters and ensure fair prices to both the producers and the consumers.

Provision of credit: The marketing co-operative societies provide credit to the farmers to save them from the necessity of selling their produce immediately after harvesting. This ensures better returns to the farmers.

Easier and cheaper transport: Bulk transport of agricultural produce by the societies is often easier and cheaper. Sometimes the societies have their own means of transport. This further reduces cost and botheration of transporting produce to the market.

Storage facilities: The co-operative marketing societies generally have storage facilities. Thus the farmers can wait for better prices. Also there is no danger to their crop yield from rains, rodents and thefts.

Grading and standardization: This task can be done more easily for a co-operative agency than for an individual farmer. For this purpose, they can seek assistance from the government or can even evolve their own grading arrangements.

Market intelligence: The co-operatives can arrange to obtain data on market prices, demand and supply and other related information from the markets on a regular basis and can plan their activities accordingly.

Influencing marketing prices: While previously the market prices were determined by the intermediaries and merchants and the helpless farmers were mere spectators force to accept, whatever was offered to them, the co-operative societies have changed the entire complexion of the game. Wherever strong marketing co-operative are operative, they have bargained for and have achieved, better prices for their agricultural produce.

Provision of inputs and consumer goods: The co-operative marketing societies can easily arrange for bulk purchase of agricultural inputs, like seeds, manures  fertilizers etc. and consumer goods at relatively lower price and can then distribute them to the members.

Processing of agricultural produce: The co-operative societies can undertake processing activities like crushing seeds, ginning 'and pressing of cotton, etc.

In addition to all these advantages, the co-operative marketing system can arouse the spirit of self-confidence and collective action in the farmers without which the programme of agricultural development, howsoever well conceived and implemented, holds no promise to success.

4.6 Storage and Warehousing

Storage is an important marketing function, which involves holding and preserving goods from the time they are produced until they are needed for consumption. An inefficient storage system not only penalizes the farmers but also disadvantages the consumer during periods of scarcity. The storage of goods, therefore, from the time of production to the time of consumption, ensures a continuous flow of goods in the market. The advantages of having an adequate storage facility are given below. Also, refer the detailed all-India storage capacity chart.

1. Storage protects the quality of perishable and semi-perishable products from deterioration
2. Some of the goods e.g., woolen garments, have a seasonal demand. To cope with this demand, production on a continuous basis and storage become necessary
3. It helps in the stabilization of prices by adjusting demand and supply
4. Storage is necessary for some period for performance of other marketing functions
5. Storage provides employment and income through price advantages.

4.6.1 Principles for Preservation of Food Grains

The following golden principles have to be followed for preservation of food grains without any deterioration, losses and wastage.

1. Food grain bags should be received with proper dunnages as per stack plan to facilitate cross ventilation/inspection/QC treatments and ensuring stacks are formed to full capacity and avoid part stacks.
2. Maintaining excellent hygienic conditions all around the stacks/ godowns /operational points and avoiding loose spillages by ensuring cleaned spillages are put into palla bags to respective stacks.
3. Effective personal supervision of prophylactic (spraying) treatments with correct dosage and immediate curative treatments (fumigation) on finding insects in a stack to avoid cross infestation on the lines of "A stitch in times saves nine".
   
4. Insistence / ensuring provision of adequate Tarpaulins/ polythene bits to the minimum size of 10' x 10' at the operational points of receipts/ issues to avoid mixing of spillages with mud and possible losses.
5. Insistence / ensuring spreading of tarpaulins / polythene bits/ gunny wrappers on the decks of trucks before loading of food grains bags to avoid oozing enroute and proper full covering of loaded bags with tarpaulins to avoid pilferages, without complacency.
6. Ensuring adequate aeration of stacks by opening all doors on all clear days.
7. Completely avoiding dumping of spillages on the stacks.

4.7 Improvement of Agricultural Marketing System

Government of India has adopted a number of measures to improve agricultural marketing, the important ones being - establishment of regulated markets, construction of warehouses, provision for grading, and standarization of produce, standarisation of weight and measures, daily broadcasting of market prices of agricultural crops on All India Radio, improvement of transport facilities, etc.

Marketing surveys: In the first place the government has undertaken marketing surveys of various goods and has published these surveys. These surveys have brought out the various problems connected with the marketing of goods and have made suggestions for their removal. 

Grading and standardization: The government has done much to grade and standardize many agricultural goods. Under the Agricultural Produce (Grading and Marketing) Act the Government has set up grading stations for commodities like ghee, flour, eggs, etc. The graded goods are stamped with the seal of the Agricultural Marketing Department -AGMARK The "Agmark" goods have a wider market and command better prices. A Central Quality Control Laboratory has been set up at Nagpur and eight other regional laboratories in different parts of the country with the purpose of testing the quality and quality of agricultural products applying for the Government's "Agmark" have been created The Government is further streamlining quality control enforcement and inspection and improvement in grading.

Provision of warehousing facilities: The Central Warehousing Corporation was set up in 1957 with the purpose of constructing and running go downs and warehouses for the storage of agricultural produce. The states has set-up the State Warehousing Corporations with the same purpose. At present the Food Corporation is constructing its own network of go downs in different parts of the country. The total storage capacity in the country was 27 million tonnes at the end of the sixth plan.

Dissemination of market information: The government has peen giving attention to the broadcasting of market information to the farmers. Since most villages have radio sets, these broadcasts are actually heard by farmers. The newspapers also publish agricultural prices either daily or weekly accompanied by a short review of trends.

Directorate of Marketing and Inspection: The directorate was set up by the Government of India to co-ordinate the agricultural marketing of various agencies and to advise the Central and State Governments on the problems of agricultural marketing. Activities of this directorate include the following:

1. promotion of grading and standardization of agricultural and allied commodities;
2. statutory regulation of markets and market practices;
3. training of personnel;
4. market extension;
5. market research, survey and planning and
6. administration of Old Storage Order, 1980 and Meat Food Products Order, 1973.

The directorate has so far formulated grade specification for 142 agricultural commodities. It enforces compulsory quality control before export on as many as 41 agricultural commodities. It is extending financial assistance to selected regulated markets for providing grading facilities for important commodities like tobacco, jute, cotton, groundnut and cashew nut at the producers level.

Government purchases and fixation of support prices: In addition to the measures mentioned above, the Government also announces minimum support price for various agricultural commodities from time to time in a bid to ensure fair returns to the farmers. These prices are fixed in accordance with the recommendations of the Commission for Agriculture Costs and Prices (CACP).

If the prices start falling below the declared level (say, as a result of glut in the market), the Government agencies like the Food Corporation of India intervene in the market to make direct purchase from the farmers at the support prices. These purchases are sold off by the Government at reasonable price through the public distribution system.

4.8 Various legal provisions 

4.8.1 Essential Commodities Act

In July 2014, the Government tried to make the Essential Commodities Act more stringent by bringing onions and potatoes under its purview. The Essential Commodities Act was enacted in 1955 with the objective of controlling and regulating trade and prices of commodities declared essential under the Act. The Act empowers the Centre to order states to impose stock limits and bring hoarders to task, in order to smoothen supplies and cool prices. Generally the Centre specifies upper limits in the case of stock holding and states prescribe specific limits. However in case there is a difference between states and the Centre, the act specifies that the latter will prevail. The Drug Price Control Order (DPCO) and such other orders have been issued under the powers of the ECA.

The Ministry of Consumer Affairs has prepared a set of recommendations to amend the Essential Commodities Act, 1955.One of the significant recommendations for such amendment is categorical insertion of a clause on banning trading of essential commodities including food stuff in the futures market except for those specifically notified. The major commodities under the purview of this Act are 

1. Petroleum and its products, including petrol, diesel, kerosene, Naphtha, solvents etc
2. Food stuff, including edible oil and seeds, vanaspati, pulses, sugarcane and its products like, khandsari and sugar, rice paddy
3. Jute and textiles
4. Drugs- prices of essential drugs are still controlled by the DPCO  
5. Fertilisers- the Fertiliser Control Order prescribes restrictions on transfer and stock of fertilizers apart from prices

Through various amendments in the Act in the past, the government removed many products such as herbicides, fungicides and exercise books from its purview. Moreover in July 2014 as the Government made the Act more stringent by bringing onions and potatoes under its purview.

4.8.2 APMC Acts

The objective of APMC Acts was to ensure that intermediaries do not compel farmers to sell their produce at throwaway prices and thereby prevent exploitation. This Act tried to ensure that farmers bring the agricultural produce first to the market yards and sell the commodities through a process of auctioning. This would ensure that they get competitive prices. However, over a period of time the implementation of this Act developed a lot of lacunae. 

Under the original APMC Act of different States,

1. A State is geographically divided and mandis are established at different places within the State
2. Farmers have to sell their produce through auction at the mandis
3. To operate in a mandi, a trader has to get a licence
4. Wholesale, retail traders (e.g. owner of a shop in a mall) and food processing companies cannot buy farm output directly from the farmer. They have to get it through the mandi.

However, instead of achieving its stated objective, the Act has worked in the opposite direction. According to analysts, analysts say the licensing of traders leads to monopoly and provides little help to farmers in direct and free marketing. Currently, exporters, food processing units and retail chain operators cannot get desired quality and quantity of produce for their business due to restrictions on direct marketing. So a food processor cannot buy the produce at the processing plant or at the warehouse. This increases the cost of commodities purchased by the food processor while the farmer ends up getting a low price for his produce..

The Ministry of Food Processing Industries (MoFPI) plans to abolish the Agricultural Produce Marketing Committee (APMC) Act, has brought the focus on the amendment/abolition of the Agricultural Produce Market Regulation (APMR) Act. Many policymakers and academicians see the law as restricting creation of infrastructure by private players, development of alternative marketing channels for farmers and establishing of a competitive market.

According to the new amendments in the APMC Act, the farmer doesn't need to bring his produce to APMC Mandi. He can directly sell it to whomever he wants. Farmers Processors, exporters, graders, packers, etc. can buy agricultural produce directly from farmers. This facilitates wider market for farmers and eliminates middlemen. This helps in the farmers getting a better price for their produce. Public Private Partnership for the management and development of agricultural markets in the country for post-harvest handling, cold storage, pre-cooling facilities, pack houses etc. have also been permitted.

However, according to Agriculture Ministry data, out of 36 states and Union Territories (UTs) only a few states have amended their APMC Act to allow direct marketing, contract farming and markets in private and cooperative sectors. Key grain producing states, such as Haryana, Punjab and Madhya Pradesh, have initiated only partial reforms.Also, seven states and UTs don't have any APMC Act to govern agricultural trade.

Andhra Pradesh permitted private markets but they've to pay a license fee of Rs 50,000 and project must be a minimum of Rs. 10 crores. This discourages small farmer/trader associations from setting up their own private markets.

Haryana only adopted Contract farming related provisions. Contract farming is a forward agreement between farmers and buyers wherein the buyer may provide inputs, technology, etc so produce meets his desired quality and the farmer agrees to produce and supply the buyer at pre-determined prices.

Only Madhya Pradesh abolished commission agent system. Bihar repealed its APMC act in 2006 and now no market fee are charged from the farmers, but other charges for loading/unloading/Hamal charges are uncontrolled.

In some states, even private markets are subjected to Mandi Tax. 

The large geographical area of India and its relatively weak infrastructure are the chief constraints on creating a proper distribution system for farm produce, which can only be corrected by proper functioning APMCs. However there are vested interests against the reforms of APMC Acts. The political will required to break these agricultural cartels, in addition to harmonizing the implementation of the Act in the different states that create market distortions is lacking. As the APMCs were created to protect the interest of farmers it would be in the fitness of things to secure farmers the choice to go to the APMC or not. As easy as it may seem, eliminating the APMC or delisting produce from the APMC cannot provide long term solutions to the problems of price inflation and farmer suicides. However, without a government regulatory board to protect the interests of small farmers, producers and traders the cartels will only shift from mandi operators to large-scale distributors and retailers who will not be under the direct control of the government.

5.0 FOOD PROCESSING IN INDIA 

We start by studying some major agricultural “revolutions” in India. But let us take a look at the structure, the chain and the opportunities in this sector. 

5.1 White Revolution

India has retained its leadership as the world's largest milk producer for the last 15 years. This has been made possible by Operation Flood - which ushered in the White Revolution in India. Production estimates stand at 132.43 million tonnes for 2012-13, accounting for approximately 17 per cent of global milk production. Unlike the other major milk producing countries, the growth story in India was driven largely by small scale farmers.

Eighty per cent of Indian cattle is owned by farmers with a herd size of up to four animals. But a number of factors impact the sustenance of these traditional small farms, such as the subsidiary nature of dairying as an activity, stagnant yields, rising feed/fodder costs and a shift in rural areas towards other vocations.

Parallel to the supply side challenges, India is slated to witness a boom in dairy demand of over 6 per cent annually. However, the average annual growth in supply is only a little over 4 per cent per annum. The demand-supply interplay effect is evident in steadily rising milk prices in the recent past. This emphasis upon the need for a second white revolution.

One of the most effective means to bridge the demand-supply gap is an innovative approach to commercial dairy farming models so that they are sustainable, inclusive and scalable. Some of these possibilities are explained below.

Large scale dairy farms: Large scale integrated dairy farms can house over 1,000 high yielding cross bred cows, with automated milking, feeding, milk processing, integrated feed production and in-house breed improvement. The ownership and responsibility for the operation and maintenance of the farm lies with an anchor processor, who may enter into contract farming model with the farmers for procurement of green fodder, a key input for enhancing milk yield of cattle.

The milk is either sold to other dairies or used for processing into value added milk products at one's own plant(s). The significant benefit of this model is efficiency in scale of operations. This model is suitable for large cooperatives and corporates.

Hub and spoke model: The main farm (hub), owned by an anchor has all the integrated facilities for milking, feed production and milk processing with a cattle count of over 500 cows. The connected/ satellite farms (spokes), with 50 to 200 cattle each, have basic infrastructure for milking and cattle management and are owned by progressive dairy farmers in close proximity to the main farm. The anchor provides technical support (veterinary care, feed management, and training) to the satellite farms.

This model offers the benefits of product and process control, with low capital expenditure by the anchor. Critical to this model are the control systems that need to be put in place to ensure that farm management administration is of desired level and that milk output quality adheres to the set standards. Further, the land requirement is distributed over multiple locations. The model is socially inclusive and lends itself to quick scale-up.

Progressive dairy farmer: With some support from an anchor processor, a number of progressive farmers may scale up their herds to establish mid-sized dairy farms with 200-300 cattle. Farms in this case are semi automated for milking and feeding. This is an entrepreneurship model where the anchor without incurring substantial capital expenditure benefits from an assured supply of milk of traceable, consistent and good quality.

The anchor provides technical support (veterinary care, feed management, training) and financial support (directly or through financial institutions) to the farms. This model is constrained by way of limited capital investment capability of the progressive farmers and is also challenging in terms of the anchor's ability to monitor farm operations.

Community Model: Community ownership and management of common infrastructure for housing, breeding, feeding and milking under a cooperative/ producer company model shall be applicable here.

A number of such farms within a restricted geographical periphery can avail of technical support services on a pooling basis. Farmers and are not restricted to sell their milk to a specific entity. Milking machines, equipment, bulk coolers and milk storage facilities are owned by the community. The strategy going forward to address the supply demand challenge needs to be aimed at strengthening supply systems which are sustainable and scalable. Drivers of success for each model need to be tested on the ground. Due to the current diversity in nature of farming systems, socio-cultural realities and climatic patterns, no single model can emerge as the answer to the search for a second White Revolution.

5.2 Blue Revolution

Blue revolution means the remarkable growth in intensive aquaculture package programme to increase the production of fish and marine products.

Advantages of Blue Revolution

Blue revolution and increase in agriculture has the following advantages -

1. Providing food security
2. Providing nutrition security
3. Providing employment, fishing, aquaculture and a host of allied activities are a source of livelihood to over 14 million people in India
4. A major foreign exchange earner Unfortunately, since the advent of more intensive modern industrial aquaculture, serious environmental and social issues have developed. Millions of indigenous coastal people are being adversely affected

1. Among the most serious problems is the degradation and loss of natural coastal resources.
2. Local waters and species may also become contaminated with antibiotics, herbicides and other medicines that are be used in aquaculture ponds.
3. Accumulation of organic matter, both in the form of unconsumed feed and faeces. When aquacultural activities are conducted directly in the marine or brackish environment lead to a process of eutrophication, with associated depletion of oxygen in the water bodies.
4. The loss of mangrove swamps and wetlands by conversion their area into shrimp farms will lead to exposure of coastal areas to erosion, flooding, increased storm damage, altered natural drainage patterns, increased salt intrusion and removed critical habitats for aquatic and terrestrial species.
5. Outbreaks of pathogens are also a major risk factor in commercial aquaculture with millions of dollars lost annually. Pathogens cannot only wipe out a cultured fishery but they also can infect nearby wild species, which can result in a collapse of these wild fisheries.

Rajiv Gandhi Center for Aquaculture (RGCA): Rajiv Gandhi Centre for Aquaculture is the Research and Development arm of the Marine Products Export Development Authority (MPEDA). It is inspired by the late Prime Minister Rajiv Gandhi's vision of making India a technologically advanced nation, founded this Centre of Excellence in Aquaculture and dedicated it to the development of the Indian Aquaculture Industry. RGCA is actively involved in the development of various Sustainable Aquaculture Technologies that are bio-secure, eco-friendly, traceable and with low carbon outputs, for seed production and grow out farming of various aquatic species, those having export potential in particular. RGCA is also developing a state-of-the-art technology transfer and training centre for disseminating the technologies developed at the various projects established at different locations in the country to the aquaculture industry in India.

National Fisheries Development Board: The Government of India launched National Fisheries Development Board in 2006. Its headquarters are in Hyderabad, located in a fish shaped building. Its activity focus areas are:

1. Intensive Aquaculture in Ponds and Tanks
2. Fisheries Development in Reservoirs.
3. Coastal Aquaculture
4. Mariculture
5. Seaweed Cultivation

There are several specialized institutes that train fishermen. The Central Institute of Fisheries Nautical and Engineering Training (CIFNET) was established in 1963 at Kochi, Kerala, India. CIFNET is serving the nation by producing trained manpower needed for manning the fishing vessels. It has two Units in Chennai (1968), Tamil Nadu and Vishakhapatnam (1981). Andhra Pradesh. Regular courses conducted at CIFNET are Bachelor Fisheries(Nautical Science) (4 years Degree), Vessel Navigator Course (2 years) and Marine Fitter Course (2 years). Apart from the above courses, Institute conduct various training programmes under the categories viz. Ancillary Courses, Statutory Courses, Refresher Courses, Short-term Courses etc

5.3 Pink Revolution 

Pink Revolution is a term used to denote the technological revolutions in the meat and poultry processing sector. India has already seen the 'green' and 'white' revolutions in its food industry - related to agriculture and milk respectively, now thrust is upon meat and poultry sector. India being a country of huge cattle and poultry population, has high potential for growth if this sector is modernized.

Potential and challenges of Pink Revolution in India: Meat and poultry processing sector in the country has great potentials for growth.

The present meat consumption per capita of around 6 grams per day will improve to 50 grams a day in the next decade or so. When such phenomenal increase in meat consumption occurs, the sector will witness a tremendous growth.

Despite India's large live stock population, India accounts only around 2 percent of global market. 

Challenges include creating standard policies for meat production and export, standardizing the quality and safety aspects of meat and poultry, and creating infrastructure facilities for modern slaughter houses, meat testing facilities and cold storages for the growth of the meat and poultry processing sector.

An institutional authority, National Meat and Poultry Processing Board has been established under the Ministry of Food Processing.

India needs more hygienic methods in meat and poultry processing and increased investment in the sector.

Government Policies To Promote Meat and Poultry Sector: There is no income tax or central excise in this sector. There are no restrictions on the export of poultry and poultry products, and the government provides some transport subsidiaries. Restrictions on Foreign Direct Investment (FDI) have also been lifted, meaning that 100 per cent FDI is now permitted to tap into available opportunities across the sector.

The government has launched a comprehensive scheme for the modernization of abattoirs across the country in order to address quality standards, contamination and deterioration of produce, and the amount of meat wasted. The Indian poultry industry has been growing at varying rates of between 8-15 per cent annually, and is now worth more than 700 billion dollars.

Political controversy: A large section of the Indian population being vegetarian, this is bound to create a lot of friction.

5.4 Yellow Revolution?

The growth, development and adoption of new varieties of oilseeds and complementary technologies nearly doubled oilseeds production from 12.6 MT in 1987-88 to 24.4 MT in 1996-97, catalyzed by the Technology Mission on Oilseeds, brought about the Yellow Revolution.

The main causes of withering Yellow Revolution, i.e., decrease in production and productivity, are: cultivation of these crops under energy-starved conditions, low or no use of nutrients, imbalanced use of fertilizers, lack of irrigation facilities and high-yielding varieties of oilseed crops, poor adoption of improved technologies, small and marginal farmers, short supply of essential inputs, etc.

The Commission for Agricultural Costs and Prices (CACP) has been using the argument of growing edible oil imports to push in another environmentally-disastrous plantation crop -- palm oil.  

The edible oil import bill has multiplied over the past three decades. For the year ending 2012 (edible oil year is from Nov 2011 to Oct 2012, for instance), the imports touched 9.01 million tonnes valued at Rs 56,295-crore. Between 2006-07 and 2011-12, edible oil imports have risen by a whopping 380 per cent. Therefore, there is definitely an urgent need to reduce the imports, and pass on a significant proportion of annual foreign exchange outgo of Rs 56,295-crore into the hands of Indian farmers. 

Instead of paying Indonesian, Malaysian, American and Brazilian farmers from where India imports edible oils, the effort should be to support the domestic farmers instead. However India, which was almost self-sufficient in edible oils in 1993-94, gradually emerged as world's second biggest importer of edible oils.

Former Prime Minister Rajiv Gandhi too was baffled. In 1985 when the import bill stood at Rs. 1500 crores he commented. "I can understand why we import petrol and fertilisers, because we don't produce enough; but why should we be importing edible oils when we can produce the same”. He launched an Oilseeds Technology Mission to increase domestic oilseeds production and thereby reduce imports of edible oils.

His efforts bore fruits. In next 10 years, by 1993-94, India had become almost self-sufficient in edible oils production, producing 97per cent of the domestic needs. The quantum jump in oilseeds production was termed as 'Yellow Revolution'. This was however not palatable to international financial institutions. It was then, and under pressure from the World Bank to restructure our economy, that India began to reduce the import tariffs on edible oils. Although under the WTO norms, India had bound its edible oil import duties at 300 per cent (except for soybean, which were reduced to 45 per cent to benefit the US interests), these duties were gradually reduced. Imports flowed in. Compared to 1.02 million tonnes edible oil imports in 1996-97, India's imports doubled to 2.98 million tonnes in 1998-99, and then jumped to 5 million tonnes in 1999-2000.

Since oilseeds are dryland crops, the negative impact was felt by millions of farmers languishing in the harsh environment. What could have been a cash crop for these poor farmers, turned out to be a cash cow for the major exporting countries. Ex-minister Sharad Pawar has himself been responsible for reducing import duties. In 2004, import duty on edible oil was pegged at 75 per cent, with a quota system that allowed still cheaper imports of refined and crude edible oils. In 2010-11, import duties on crude edible oil have been brought down to zero, and refined edible oil to 7.5 per cent. No wonder, imports increased from 4.7 million tonnes in 2006 to 9.01 million tonnes in 2012.

However, as per research conducted by the University of Purdue, University of Nebraska, University of Wisconsin, University of Iowa and University of Arkansas in the US, crop yields of GM soy have been found 4 to 20 per cent less than non-GM varieties. Therefore the logic of promoting GM varieties of soybean which produce less than the existing improved varieties that are not genetically modified is questionable.

To say that producing oilseeds to meet the present requirements would require 30 per cent more land than what is under cultivation is also mischievous. Madhya Pradesh, Chhatisgarh, Rajasthan besides some parts of Maharashtra and Andhra Pradesh can be very conveniently shifted from wheat, rice and cotton to oilseeds, including mustard and soybean. This will reduce the burden on wheat and rice storage, and at the same time provide more income in the hands of dryland farmers. In addition, it will also mean reducing the groundwater usage since oilseeds water requirement is much less as compared.

Palm oil plantations on the other hand have been found to environmentally destructive. Worldwatch Institute has shown how palm oil monoculture adds to desertification, and also acerbates global warming by releasing 10 times more carbon dioxide into the atmosphere than tropical forest. 

In any case, as is clear from past experience, no effort to improve production can be fruitful till India restores the import duties to at least 130 to 150 per cent so as to stop cheaper imports. This has to be accompanied by a mission approach to provide assured procurement and assured prices to farmers. Madhya Pradesh, Chhatisgarh and Rajasthan can very easily become the edible oil supplier of the country provided a set of policy decisions are spelled out that can make oilseeds cultivation economically viable. Setting up of processing industries will also help create more employment.

5.5 Government Initiatives in food processing industry

The Government of India has allowed FDI up to 100 per cent in food processing sector through automatic route. For promotion and development of the food processing sector, it has allocated a sum of Rs 5,990 crore (US$ 1 billion) under various schemes of the food processing industries ministry during the 12th Five Year Plan.

The MOFPI and 'Invest India' have entered into an agreement for the setting up of an Investors' "Help Desk" for offering online support to investors, both domestic and international, with regard to their queries, and guide them particularly at the initial stage of setting up their units. 

The Ministry has launched a Centrally Sponsored Scheme namely, National Mission on Food Processing (NMFP) during the 12th Plan. A sum of Rs 204.85 crore (US$ 34.23 million) has been released to States/ Union Territories (UT) under the scheme during FY 13 and FY 14 (up to January 31).

The Ministry is implementing a scheme for Human Resource Development (HRD) in the food processing sector on developing technologists, managers, entrepreneurs and manpower for quality management in the sector. The annual manpower requirement in the industry is estimated at about 5.3 lakh persons.

With the objective of providing incentive to create integrated cold chain and preservation infrastructure facilities in the country, the Ministry is implementing the Scheme of Integrated Cold Chain, Value Addition and Preservation Infrastructure. 

Food Processing - Indian Regulatory & Policy Environment

The food processing industry assumes enormous significance due to its vital linkages and synergies with manufacturing and agriculture. Realising its strategic importance, the government has laid out various promotional measures through the National Food Processing Policy, 2000 and other schemes to encourage the growth of the sector. These include:

1. Most of the food processing industries have been exempted from the provisions of industrial licensing under Industries (Development and Regulation) Act, 1951 with the exception of beer and alcoholic drinks and items reserved for Small Scale Sector, like vinegar, bread, bakery, etc.
2. The industry was included in the list of priority sector for bank lending in 1999.
3. Automatic approval for foreign equity up to 100 per cent is available for most of the processed food items except alcohol, beer and those reserved for small scale sector subject to certain conditions.
4. There has been a substantial rationalisation of taxes in the food processing sector in recent years. Notably, since 2001-02, processed fruits & vegetables are exempted from payment of excise duty. Other items attract a concessional rate of 1 per cent subject to non-availment of Cenvat credit or 5 per cent with Cenvat credit and 10 per cent ad valorem.
5. Under the Income Tax Act, a deduction of 100 per cent of profit for five years and 25 per cent of profit for the next five years permitted since 2004-05 for fruits & vegetable and food grain processing units. Later on in 2009, the Act was amended to include perishable food items like milk, poultry and meat.
6. Full exemption from excise duty has been extended to specified goods intended to be used for the installation of cold storage, cold room or refrigerated vehicle for the preservation, storage, transport or processing of agriculture, horticulture, dairy, poultry, marine products and meat.
7. Excise duty is nil on machines for cleaning, sorting or grading of seeds, grain and machinery used in milling industry.
8. Full exemption from customs  duty  to refrigeration units required forth manufacture of refrigerated vans or trucks.

Problem areas and anomalies in the tax structure

While the incidence and tariff of indirect taxes have been reduced over the years, the tax structure for a range of processed foods is not uniform. The present system of taxation is based on products, which gives rise to various classification related anomalies. Many agro and food products such as beverages containing milk, foods obtained by swelling of cereals, cereal products, biscuits, textured vegetable proteins (soya bari), instant food mixes and ready to eat packaged foods, aerated drinks still remain subject to high excise tax. There is a different tax structure for branded and non-branded food items. Branded food items attract higher sales tax, making them costlier and this does not help to popularize processed food.

Further, under Value Added Tax (VAT), levied by State Governments, most processed food products are taxed at varying rates of 1%, 4% and 13%. Apart from VAT, other taxes such as entry tax, octroi etc. are also levied on food products. Also, the packing material attracts a high excise duty of 12 per cent making  processed foods more costly. Even the customs duty on packaging materials continues to be high. The result is that cumulative incidence of these taxes make processed foods costlier than fresh foods in India, unlike in other countries. Most countries in the world do not levy taxes/ duty on processed food products to promote value addition in the food sector.

The government has laid major focus on the food processing industry, particularly in the last five years. The proposed financial outlay for the sector under the various government schemes was increased manifold from Rs.6.5 billion in the tenth five year plan to a whopping Rs.50.06 billion in the eleventh five year plan. The financial assistance is meant for infrastructure development, technology up gradation, modernization, expansion, research & development, promotions, quality control and other miscellaneous activities. The scheme for infrastructure development, technology up-gradation, modernisation and expansion accounts for a major chunk of the proposed outlay. The government has set ambitious targets for the food processing industry to be achieved by 2015 which include:

1. Increase in the level of processing of perishables from 6% to 20%
2. Increase in value addition from 20% to 35%
3. Increase in global food trade from 1.5 % to 3 %

However, the performance of the schemes has not been very encouraging as can be observed from the table above. A review under the different five year plans reveal that the aggregate disbursement under various schemes has been lower than the proposed financial outlay. The gap between financial assistance proposed and actual funds availed has widened in the eleventh five year plan. Out of the proposed financial outlay of Rs.50.06 billion, only Rs.6.83 billion has been utilised for the development of the industry in the first three years of the Eleventh Five Year Plan.

For instance, the progress on the integrated cold chain facility scheme of the government meant to address problem of wastages has been very slow. Although the outlay assistance for the development of cold chain facilities has been increased by the government over the past decade,m the initiatives at the ground level are yet to achieve the desirable result. While 18 projects have been supported under cold chain facilities and 5 under Value Added Centres under the eleventh five year plan, only 4 Cold Storages and 2 Value Added Centres are currently operational.

Even the mega food park scheme meant to provide all infrastructure facilities for food processing companies under one roof has not achieved the desired results. While the Ministry of Food Processing Industry (MoFPI) has supported development of 54 Food Parks in the country since the Eighth Five Year Plan period, most of them are yet to be operational. Against a physical target of 25 Parks during the 10th Plan, 18 Parks have been sanctioned so far. Of these, only 8 Food Parks may be said to be operational.

 

Even those operational are facing problems of gross under-utilization, besides being unable to attract entrepreneurs. Only 28 units are currently in operation in these 8 Parks.

FDI Policy

Automatic approval (including foreign technology agreements within specified norms) is permitted for FDI up to 100 percent equity of Indian companies, for all food and beverages except for alcoholic beverages and items reserved for small scale sector.

As per DIPP data available, the processed foods industry has attracted cumulative FDI inflows to the tune of Rs 40,264 crores between April 2000 and March 2016. USA tops the list in terms of investing in the Indian food processing industry. Some of the prominent food & beverage selling companies which have invested in India (through partnerships or creation of wholly owned subsidiaries) include Coca Cola, Heinz Italia, Groupe Danone, Kellog Company, Pepsico, Nestle, Unilever, etc.

While the country's food processing industry has gradually opened up to a wide range of investors across the globe, the absolute numbers do not appear substantial. They constituted a mere 0.8 per cent in total FDI inflows. This is in spite of the permission of 100 per cent FDI in the food processing sector. The main factors attributed to the low FDI in the sector are:

1. Agriculture Land Ceiling Act (ALCA) - It obstructs large scale corporate farming which is a prerequisite for large investments in processing facilities. Although contract farming is allowed in various states, it is not undertaken on a massive scale. Its enforcement is an area of concern.
2. Agricultural Produce Market Committee Act (APMC Act): The Act restricts direct farmer-processor linkages for sourcing of quality and quantity raw material.

6.0 e-NAM

In addition to the ambitious PMKSY, the national electronic market (eNAM) will aid recovery in a big way. The electronic platform will be an indirect route to ensure better prices for farmers through non-price factors by increasing connectivity, competition and reducing price spreads in different agricultural markets. The goal of the e-marketing platform will be to reform agricultural marketing, improve access to markets and transparent price discovery for farmers. It would also increase farmers' access to markets through warehouse-based sales and thus obviate the need to transport his produce to the mandi (wholesale markets).

The central sector scheme for promotion of the national common market will be set up through the Agri-Tech Infrastructure Fund with a budget of Rs.200 crore. The target is to bring 585 regulated wholesale markets across the country on board the electronic platform in the next three years. 250 markets will come under the e-platform in 2015-16, another 200 in 2016-17 and 135 in 2017-18. For integration with the national e-platform, states will have to reform existing markets by giving a single licence that will be valid across the state, a single-point levy of market fee and provision for electronic auction for price discovery. This, the government hopes, will provide better prices to farmers, improve the agriculture supply chain and reduce wastage.

MEGA FOOD PARKS

• The Scheme of Mega Food Park aims at providing a mechanism to link agricultural production to the market by bringing together farmers, processors and retailers so as to ensure maximizing value addition, minimizing wastage, increasing farmers income and creating employment opportunities particularly in rural sector. 
• The Mega Food Park Scheme is based on “Cluster” approach and envisages creation of state of art support infrastructure in a well-defined agri / horticultural zone for setting up of modern food processing units in the industrial plots provided in the park with well-established supply chain. 
• Mega food park typically consist of supply chain infrastructure including collection centers, primary processing centers, central processing centers, cold chain and around 25-30 fully developed plots for entrepreneurs to set up food processing units.
• The Mega Food Park project is implemented by a Special Purpose Vehicle (SPV) which is a Body Corporate registered under the Companies Act. State Government, State Government entities and Cooperatives are not required to form a separate SPV for implementation of Mega Food Park project. Subject to fulfillment of the conditions of the Scheme Guidelines, the funds are released to the SPVs. 

All status can be viewed at 
http://mofpi.nic.in/sites/default/files/42_mfps_01.07.2019_with_totals.pdf

• So far following sixteen Mega Food Parks are operational:

1. Srini Mega Food Park, Chittoor, Andhra Pradesh.
2. Godavari Mega Aqua Park, West Godavari, Andhra Pradesh
3. North East Mega Food Park, Nalbari, Assam
4. Gujarat Agro Mega Food Park, Surat, Gujarat
5. Cremica mega Food park, Una, Himachal Pradesh
6. Integrated Mega Food Park, Tumkur, Karnataka
7. Indus Mega Food Park, Khargoan, Madhya Pradesh
8. Paithan Mega Food Park, Aurangabad, Maharashtra
9. Satara Mega Food Park, Satara, Maharashtra
10. MITS Mega Food Park, Rayagada, Odisha
11. International Mega Food Park, Fazilka, Punjab
12. Greentech Mega Food park, Ajmer, rajasthan
13. Patanjali Food and Herbal Park, Haridwar, Uttarakhand
14. Himalayan Mega Food Park, Udham Singh Nagar, Uttarakhand
15. Jangipur Bengal Mega Food Park, Murshidabad, West Bengal
16. Tripura Mega Food Park, West Tripura, Tripura

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