Lesson 2. STATUS OF FOOD INDUSTRY IN INDIA AND ABROAD

Module 1. Status of food processing industry and future prospects

Lesson 2
STATUS OF FOOD INDUSTRY IN INDIA AND ABROAD

2.1 Introduction

The status of several food industries of India have been covered in Lesson 1. In this lesson the food processing industry in few countries abroad will be discussed for comparison with our own food processing industry. India is viewed as a very large market for processed food products by the International processing marketers of food items in the world.

2.2 Comparison of Indian Food Industry with Other Nations

Despite being one of the largest producers of food items, only 2.0% of the total produce is processed in India as against an average of 40.0% in many developing and 70.0% in most developed countries of the World. The value addition to food production is only 7.0% in India as against 23.0% in China, 40.0% in Philippines and nearly 200.0% in UK.

The percentage of processed food in Gross Domestic Product (GDP) of few countries is presented in Table 2.1.

Table 2.1 Percentage of Processed food in GDP of some countries

2.1

(Source: Exim Bank Research, 2008)

2.3 Food Industry in the United States of America

The American food industry generates approximately 1.0 trillion US dollars a year in sales. In 2000, United States firm accounted for 40.0% of the World’s top 50 food processors and the United States is the World’s largest exporter and importer of processed foods and drink. Exports at US $30 billion in 2000 stagnated and fell off in the second half of the 1990s, whereas imports at US $37 billion in 2000 increased considerably in the same period. The principal exports are meat products, (deleted miscellaneous foods), grain mill, fats/oils, fruit and vegetables etc. By order of importance the five principal importers of US processed foods and drink are Japan, Canada, Mexico, Thailand, South Korea and Hong Kong. Imports, in their turn, come primarily from Canada, Mexico, Thailand, France and Italy. Three tendencies of trade in processed foods are noted viz., the importance of regional blocks, the westernization of diets in the developed Asian economies, and the competitiveness of high-quality European products.

The top American food company in 2005 was Tyson Foods, originally a chicken processor that branched out into beef, pork and a wide range of prepared food products. Tyson’s 2005 food sales (from 2004) reached nearly 24 billion US dollars. Close behind Tyson Foods stood American food icon Kraft Foods, many of whose brands are true household names in the US: Chips Ahoy cookies, Louis Rich meats, Maxwell House coffee, Cracker Barrel cheese, Oscar Mayer meats, Planters nuts, Oreos, Nabisco, Velveeta spread, Jell-O, Kool-Aid, Sanka coffee, Shake ‘N Bake, Ritz crackers, Minute Rice, Miracle Whip, etc. PepsiCo, with brands like Pepsi, Aunt Jemima pancakes, Lipton Iced Tea, Frito-Lay snacks, Mountain Dew, Tropicana orange juice, and Rice-A- Roni, nosed up an aggressive third on the list, exceeding 20 billion US dollars in sales.

2.4 Food Industry in Brazil

The Brazilian food processing industry was valued at US $ 173 billion in 2009. The food market in Brazil is expected to increase by 4.0-4.5 % in the next five years.

The meat and by-products sectors are the most lucrative processing industry in 2009, accounting to US $ 34.4 billion in sales. Coffee, tea and cereals ranked second accounting for US $ 19.5 billion. The sugar industry ranked third, with a significant increase compared to 2008.

F 2.1

Fig. 2.1. Share of food items in sales of the Brazilian food industry

(Source: Brazilian Food Processor’s Association, 2009)

2.5 Food Industry in China

The food processing industry has played an important part in its economic development. In 2007, China’s food sales revenue exceeded RMB (Renminbi) three trillion ($ 384 billion), 70 times the 1978 pre-reform level. China’s food industry grew at 9 % in 2008. In addition, the value of foreign trade in 2008 reached $ 1,218 trillion, up 27 % from $ 956 trillion in 2007.

In 2007, the number of large food processing companies grew to nearly 30,000 with fixed assets totaling RMB (deleted Renminbi) 344.8 billion ($44.2 billion) with total food export and imports of $32.3 billion and $30.6 billion, respectively. China has up to 500,000 food processing firms, which includes small industries. Despite 30 years of development, its ratio of processed output value to agricultural production value is only 1:2; lower than 3:1 observed for developed countries.

Recently China has developed a strong domestic demand for dairy products, which is attracting more of the world’s dairy firms. In 2004, China imported 388 MT of dairy products. China targets at developing its produce of corn, wheat, dairy products, food additives and seasonings. Moreover the demand for imported poultry, cereals, fish; tree nuts and soybeans will continue to be on the rise with new growth for baking ingredients and fruit flavorings.

2.6 Future Scope of Food Industry

In the field of processed foods, the bigger opportunities lie in soft drinks, liquid milk and dairy products, confectionery, packaged wheat flour, biscuits, processed meat and poultry tea and coffee than that of jams, sauces, etc.

Biotechnology (providing genetically modified foods) in the Indian context could create wealth for the nation, improve health care system, increase agricultural output and provide cleaner technologies for sustainable development. Organic farming will go a long way in delivering safe produce to the consumers.

The future lies in delivering quality products at a quick pace. This requires high-tech machines and expertise. Adoption of foreign technology will make the products competitive in the international market. There is a strong justification to make the use of organic waste as energy source, an integral part of food processing. This would reduce the dependence of food industry on conventional energy supply and reduce pollution.

2.7 Conclusion

India has all the makings of an agricultural super power. From the stage of struggling to take care of the basic food needs of its ever expanding population during the independence, it has made some headway in visualizing the tremendous potential for commercial and export-oriented agro-business. Development of food processing industries requires cooperation and collaboration of the government, R & D Institutions, farmers, industrial and financial bodies.


Last modified: Thursday, 1 November 2012, 5:47 AM