The Hindu Business Line : Making food processing viable

In Rural India those trying food-processing with help of plant and machinery quickly realise that the `value-added' is less than the `cost-added' as all the advantage is creamed off by the equipment manufacturer. Rural food-processing can be viable only when catering to proximate markets where there would be no need to conform to international standards. It is enough to maintain basic cleanliness. And if the processed food can be served directly to consumers, the packaging costs can be eliminated, says Sharad Joshi.

FOOD PROCESSING has been a sunrise industry for more than 50 years. It is a sun that has taken an inordinately long time to rise above the horizon in spite of the fact that India produces large agricultural surpluses and ranks amongst the world's industrial powers of note. It appears that it is in no particular hurry to rise further.

Agriculture produce is perishable. This, inter alia, imposes severe restrictions on the capacity of the farmers to market their produce. Whatever they produce has to be marketed quickly. If the time limit is not respected the result would be serious economic loss. The purpose of all food-processing is to add time and space dimension to what is essentially very perishable. Food-processing further gives agricultural produce a form and flavour that would make them more acceptable to the consumers. Briefly, adding time, space and flavour is the essential function of the food-processing industry.

In most countries food-processing is taken seriously only after agricultural production reaches a level of surplus that would make processing worthwhile. Till then, whatever food-processing takes place is largely domestic in character, such as preparation of pickles, or papads for household consumption.

In the second stage, food-processing takes the character, which is best summarised thus: "Eat what you can and can what you can't." This is where the size of agricultural surplus makes it worthwhile to have recourse to mechanisation and large-scale production. Soon comes the more advanced stage where `hand-made' ceases to be the hallmark of quality. It is replaced by `untouched by hand'. Through these various stages of transformations a number of developments take place simultaneously.

Invention of new varieties of crops particularly suitable for the end-product. For example, the varieties of tomatoes that can be used for juices, soups and ketchups would be quite different. Similarly, separate varieties of grapes will be developed for the production of raisins, the other varieties being kept for table consumption.

The size of production involved in this stage is much larger than what most people tend to imagine. Many are shocked when told that the manufacture of petha on a modest scale requires more than 300 trucks of pithas (pumpkin gourds) everyday and a tomato-processing factory in Punjab needs to have 20 trucks of tomatoes every hour.

Processing on this scale presumes fairly large-scale agricultural production and comprehensive use of management techniques. This is possible only when the land is not fragmented. Without going into the merits and demerits of land-reforms, one can say that successful food-processing of the modern type is possible only where there is some possibility of bringing about, at least, an operational consolidation of lands for a fairly long period. If the lands are fragmented and the consolidation is short-term, the produce is unlikely to support a competitively efficient food-processing.

Food quality and hygiene are of utmost importance. Even more so when one starts processing for export. Knowledge of and conformity with international quality, as also sanitary and phyto-sanitary (SPS) standards are indispensable. Further, the preference varies from culture to culture. Masala flavoured chips are not to the taste of most non-exotic people.

The food-processing sector now tends to produce consumable products of modern visage such as soft-drinks, wines, biscuits, cheese and ice-creams where the Western countries have greater experience. Rural food-processing units, on the contrary, can specialise in foods and snacks that have particular appeal for the consumer in the local market without any fears about competition born out of globalisation.

There is a lesson in it for those who plan for rural out-reach of food-processing. How does addition of space, time and flavour affect rural food-processing? A common misconception is that the farmers or their societies have a built-in advantage in food-processing due to the proximity to the source of raw material. This is only partially true.

Experience in India shows that farmers' societies have recorded a respectable performance in the production of only a few things such as sugar, alcohol, edible oils and dairy-products. In most areas, where the processed food goes more or less directly to the housewife, it is far more important to be knowledgeable about consumers' tastes and preferences.

Recent experience in India shows that urban housewives have been more successful in marketing the `ready to cook' items. It is also seen that while large-scale factories built to manufacture chapattis have failed, individual house-wives preparing chapattis and sabjis to pack tiffin-boxes for office-goers have been eminently successful.

In Rural India, those who try their hand at food-processing with the help of plant and machinery erected on turnkey basis, invariably realise that all the advantage is creamed-off by the plant manufacturers and that for them the `value-added' is less than the `cost-added'.

Rural food-processing will have a definite advantage since it can kick-start on the basis of relatively modest fixed and working capital and without completing the stage of operational consolidation of land.

If the rural processors start thinking pragmatically of catering only to proximate markets they would not be much bothered by the consideration of conforming to with international quality and SPS standards.

It would be enough to maintain the kitchen-cleanliness of a typical upper-middle-class Indian housewife. If the processed food is served directly to the consumers, the packaging costs, that are generally very heavy, can be eliminated.

(The author, a Rajya Sabha MP, is Founder, Shetkari Sanghatana. He can be reached at sharad@mah.nic.in)

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