Food Processing Industries in India: Opportunities - PowerPoint PPT Presentation


Title: Food Processing Industries in India: Opportunities


1
Terminal Markets and Special Economic Zones
for Agricultural Produce
2
Increasing Farm Income
  • More production with better marketing

3
Production stagnating, big scope for better
marketing
  • Double the income through more efficient marketing

4
But the present day markets are not efficient
  • Infrastructure for marketing of perishables
  • Primary grading/ collection centers - non
    existent
  • Warehousing and cold storage - inadequate
  • Cold chain - non existent
  • Quality certification system - non existent
  • Transportation for perishables - non existent
  • Rural markets - complete lack of infrastructure
  • Wholesale markets - in government control, lack
    modern facilities
  • Private / direct markets - not permitted
  • Post harvest losses 25 to 30 in perishables

5
Present Scenario in Value Chain
  • Cost Build Up For One Kg. Basket Of Fruit

11.6
2.5
1.7
4.1
3.3
FARMER
TRADER
WHOLESALER
RETAILER
CONSUMER PRICE
Retail Markups
350
220
160
100
FARM GATE PRICES
MILK
FISH
FRUITS VEGETABLES
6
Terminal markets
  • Catalysts for transformation

7
Concept
  • Modern terminal markets
  • A professionally managed competitive structure
  • To provide market services
  • to farmers at their door step
  • Comprehensive solution to meet needs of
    stakeholders
  • Auction
  • Processing industry
  • Exports
  • Retail chain and Consumers
  • Requiring high investment and efficient
    management skills
  • Can be infused by private enterprise

8
Structure of Terminal market
  • Hub-and-Spoke Format Terminal Market (the hub)
    to be linked to number of collection centres (the
    spokes)
  • Collection centres (Spokes) to be conveniently
    located at key production centres to allow easy
    access to farmers
  • Provide state of art facilities for
  • electronic auction,
  • grading, washing and packing lines,
  • processing and exports,
  • banking etc.
  • Commodities to be covered include
  • Fruits and vegetables, Flowers, aromatics and
    herbs
  • Meat Poultry

9
(No Transcript)
10
Salient Features of the Terminal Markets
Feature Mumbai Nasik Chandigarh Rai Patna Bhopal Kolkata Nagpur
Area of market (in acre) 200 100 100 88 75 59 55 100
Yearly handling capacity (lac MT) 6 3 2.25 3 2 2 5.47 2.4
No. of collection centres 60 20 20 30 26 25 12 25
Peak throughput (MT/day) 3000 1500 800 1000 800 1000 1500 800
Cold Store Capacity (in MT) 15000 5000 3000 5000 2550 2000 10000 2000
Total cost of project (Rs. crore) 120 60 53.6 65.6 59 49.6 93.4 54.5
11
Financial Parameters of Nasik Project
  • Total Cost of Project ( in Rs. Crore) 60.00
  • Debt Equity Ratio 1.60
  • Debt Service Coverage Ratio 1.82
  • Pay Back Period ( years) 10.00
  • Break Even Point( ) 46.68
  • Cash Break Even Point() 28.79
  • IRR ( ) 17.25

12
Key expectation from the private enterprise
  • Provide envisaged infrastructure at the TM and
    the CC in the hub- and- spoke format
  • Establish backward linkage with growers in the
    catchment area of the TM through establishing the
    collection centers.
  • Progressively involve farmers and their
    organizations in the operation and management of
    the collection centers
  • Facilitate direct supply to processing units,
    retail chains and exporters, in addition to
    auction facility via the collection centers and
    terminal market

13
Key expectation from the private enterprise
  • Provide advisory services to farmers on inputs,
    prices, quality, multi modal transport and
    exports
  • Project DPR only illustrative. Project should,
    however, be designed to handle the minimum
    quantity of peak throughput (MT/day) and yearly
    handling capacity as prescribed.
  • Private enterprise at liberty to
  • Prepare own business model with regard to Size of
    market and Scale of operation
  • Set up additional facilities to provide
    complimentary services (input supply,
    processing, consumer goods etc.)
  • Collect user charges for the infrastructure and
    services provided
  • For basic services of aggregation at CC and
    auction at TM
  • User charge not to exceed 2 of the produce value

14
Expectation from the State Government
  • Reforms in APMC Act
  • To allow the private enterprise
  • Establish collection centres in the catchment
    area of the TM
  • Source material from farmers field directly in
    the catchment area of the TM
  • Organize supply to traders, retail chain,
    processing industry and to institutional buyers
    throughout the country
  • Cold storage/ warehouses of TM to act as delivery
    point for trading in perishables on the commodity
    exchanges
  • Pack house of the TM to act as exit point for
    exports

15
Expectation from the State Government
  • Regulatory clearances
  • Single license to operate in the entire
    State/adjoining States
  • Single point levy collection of market fee
  • Autonomy in commercial operations of TM
  • Clearance of land use for the TM/CCs
  • Provision of Civic amenities (including drinking
    water, municipal waste disposal, police
    security, post office etc)
  • Statutory clearance from
  • Local authority
  • Town planning Urban development
  • Revenue department

16
Expectation from the State Government
  • Play a pro-active role
  • Appointment of a Nodal Officer/Empowered
    Committee
  • to facilitate securing regulatory compliance
  • to remove difficulty in operation of the project
  • Identification of land for the TM/CC
  • Provision of Government land on long term lease,
    subject to availability and suitability
  • Infrastructure support to TM/CC
  • road connectivity, power and water supply etc.
  • States free to participate in the equity of
    Project
  • Direct funding
  • Land/infrastructure support

17
Role of the Central Government
  • Support the project through participation in its
    equity capital
  • Terms for financing
  • Up to 49 of project equity, including
    contribution from State
  • NHM/State will have the option to allocate its
    equity to farmers organisations actively
    participating in the business of the project
  • Private enterprise to be selected through an
    open, transparent competitive bidding process.
  • Project to be awarded to bidder with the request
    for minimum Government equity participation.

18
Outlay in 2006-07
  • Approved outlay for NHM
  • X Five Year Plan Rs.2300 crore
  • During 2006-07 Rs.1000 crore
  • Outlay for Terminal Markets
  • Participation in Equity Capital Rs.148.00
    crore
  • Project Development Assistance Rs. 1.00
    crore
  • General Awareness Publicity Rs. 1.00
    crore
  • Total Rs. 150.00 crore

19
Parameter Baseline status Expected outcome
Trade transparency Non-existing Transparent auctions through electronic auction system
Cold chain infrastructure poor Setting up of cold storage at each market ranging from 2000 to 15000 MT capacity
Backward-forward linkages poor Minimum of 20 collection centers nearer to the farmers field will be set up. The farmer will have alternative options to supply to the supply chains, processing, export of commodities etc.
Monopoly of APMC Markets prevalent Farmer is provided with alternative option of taking his produce to terminal markets.
Multiple intermediaries prevalent Length of the chain of commission agents will substantially be reduced with an ideal situation of eliminating the commission agents completely.
Beneficiary farmers -- 16000 to 20000 farmers under each terminal market.
Share of the farmer in the consumer price Varies from 30 to 60 for perishables depending on the location, season, demand and supply etc. Farmers share is expected to increase to 50 to 70 of the consumer price.
20
Risk Factors
  • Attractiveness to Private Enterprises
  • Availability of Suitable Land
  • Success in establishing backward linkages with
    farmers

21
Process so far
  • General Council of the NHM approved the concept
    on 14.12.05
  • Honble FM announced in the Budget Speech of
    2006-07 for setting up of Terminal Markets with
    an outlay of Rs.150 crore
  • National Conference on Terminal Markets held on
    20.02.2006 discussed with States and Private
    Enterprises
  • There is adequate enthusiasm among Private
    Enterprises on the proposal as seen in the
    responses to Expression of Interest

22
Way Forward
  • Approval of the proposal by October end
  • Finalization of Bid Process/ Bid documents by
    NIAM
  • Inviting the bids by States and selecting the
    private enterprise
  • National Executive Committee of NHM approves
    releases the equity
  • Project Execution
  • General Council of NHM monitors the progress

23
Agri Export Zones
24
India is the front ranking producer of many
perishable commodities
Cattle / buffaloes Largest in the world 283
million
Milk Largest Producer 91 Mn T
F V 2 in the world 151 Mn T
Fisheries Marine 2.7 Mn T Inland 3.1 Mn T
Food Grains 2 in the world (220 Mn T)
Tea Largest Producer (0.85 Mn T)
Sugarcane 2 in the world (245 Mn T)
Goat Sheep 182 million
25
Indias competitiveness in global markets
Source UN COMTRADE Statistics, World Bank Staff
Estimates
26
Exports of Agricultural Products, Why ?
  • Inherent Indian strength in Agriculture
  • Opportunities emerging out of WTO Regime

27
How did the concept of AEZ come
about ?
  • Analysis of existing export promotion
    measures for agri exports
  • Inability to address the entire value chain
  • Hence, the policy of Agri Export Zones announced
    on 31st March, 2001 under Exim Policy

28
What is Agri Export Zone ?
Agri export Zone attempts to take a look at
an identified produce/ product or a group or a
group of produce/ products sourced from a
geographically contiguous area with a view to
comprehensively addressing all the issues
relating to each stage of the entire value
chain, from farm to the ultimate consumer
29
Agri Exports activities
30
What does AEZ entail ?
  • Utilise existing interventions in a coordinated
    manner to promote exports (Convergence)
  • Partnership of farmers, processors, exporters,
    State Government agencies and Central Government
    agencies.
  • Focus on important issues.

31
What does AEZ entail ?
Fiscal Financial Monetary Administrative Lega
l Tariff Non tariff Related issues
Excise, Custom, Sales Tax, Mandi Tax etc. rebate
by central and State agencies Schemes of
APEDA, NHB, MFPI, MOA etc. Reduction in
interest on credit by banks Manpower
requirement for research extension related
activities Amendment of regulations with
regard to movement of goods, institutional
arrangement for consistent supply of produce
etc. Import of duties, product standards,
pesticide residues, Codex, etc.
32
Stages for setting up of AEZ ?
  • Preparation of proposal by the State Governments.
  • Clearance by the Steering Committee chaired by
    Commerce Secretary.
  • Signing of MoU between Central (APEDA) and State
    Govt. undertaking commitments
  • Nodal Officers appointed
  • Detailed action plan for each activity and
    monitoring by the inter departmental Coordination
    Committee.
  • Notification by DGFT
  • Advertisement by State Govt./Agencies inviting
    private investment
  • DPR and the execution of the detailed action
    plan.

33
Conclusion
AEZs on a MAP

34
Monitoring System
  • A web based monitoring system has been evolved
    wherein
  • Each activity as a part of detailed action plan
    is clearly defined
  • The agency responsible for undertaking such
    activity is identified
  • The time within which such activity has to be
    performed is clearly indicated.
  • State governments have committed a nodal agency
    for the purpose of coordination and the progress
    is monitored at the level of Chief / Addl Chief
    Secretary.

35
SOME SUGGESTIONS
  • Restructuring of Project Monitoring System
    (Single Window Concept for disbursement)
  • Blue Print Project Reports for attracting
    Investments
  • Market Intelligence Reports
  • Funding Mechanism to give liberty to state nodal
    agencies
  • Income Tax Incentive
  • Higher scale of Financial Assistance
  • Direct Finance by NABARD on concessional terms
  • Rebate on premium for crop insurance

36
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Food Processing Industries in India: Opportunities

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Transcript and Presenter's Notes

Title: Food Processing Industries in India: Opportunities


1
Terminal Markets and Special Economic Zones
for Agricultural Produce
2
Increasing Farm Income
  • More production with better marketing

3
Production stagnating, big scope for better
marketing
  • Double the income through more efficient marketing

4
But the present day markets are not efficient
  • Infrastructure for marketing of perishables
  • Primary grading/ collection centers - non
    existent
  • Warehousing and cold storage - inadequate
  • Cold chain - non existent
  • Quality certification system - non existent
  • Transportation for perishables - non existent
  • Rural markets - complete lack of infrastructure
  • Wholesale markets - in government control, lack
    modern facilities
  • Private / direct markets - not permitted
  • Post harvest losses 25 to 30 in perishables

5
Present Scenario in Value Chain
  • Cost Build Up For One Kg. Basket Of Fruit

11.6
2.5
1.7
4.1
3.3
FARMER
TRADER
WHOLESALER
RETAILER
CONSUMER PRICE
Retail Markups
350
220
160
100
FARM GATE PRICES
MILK
FISH
FRUITS VEGETABLES
6
Terminal markets
  • Catalysts for transformation

7
Concept
  • Modern terminal markets
  • A professionally managed competitive structure
  • To provide market services
  • to farmers at their door step
  • Comprehensive solution to meet needs of
    stakeholders
  • Auction
  • Processing industry
  • Exports
  • Retail chain and Consumers
  • Requiring high investment and efficient
    management skills
  • Can be infused by private enterprise

8
Structure of Terminal market
  • Hub-and-Spoke Format Terminal Market (the hub)
    to be linked to number of collection centres (the
    spokes)
  • Collection centres (Spokes) to be conveniently
    located at key production centres to allow easy
    access to farmers
  • Provide state of art facilities for
  • electronic auction,
  • grading, washing and packing lines,
  • processing and exports,
  • banking etc.
  • Commodities to be covered include
  • Fruits and vegetables, Flowers, aromatics and
    herbs
  • Meat Poultry

9
(No Transcript)
10
Salient Features of the Terminal Markets
Feature Mumbai Nasik Chandigarh Rai Patna Bhopal Kolkata Nagpur
Area of market (in acre) 200 100 100 88 75 59 55 100
Yearly handling capacity (lac MT) 6 3 2.25 3 2 2 5.47 2.4
No. of collection centres 60 20 20 30 26 25 12 25
Peak throughput (MT/day) 3000 1500 800 1000 800 1000 1500 800
Cold Store Capacity (in MT) 15000 5000 3000 5000 2550 2000 10000 2000
Total cost of project (Rs. crore) 120 60 53.6 65.6 59 49.6 93.4 54.5
11
Financial Parameters of Nasik Project
  • Total Cost of Project ( in Rs. Crore) 60.00
  • Debt Equity Ratio 1.60
  • Debt Service Coverage Ratio 1.82
  • Pay Back Period ( years) 10.00
  • Break Even Point( ) 46.68
  • Cash Break Even Point() 28.79
  • IRR ( ) 17.25

12
Key expectation from the private enterprise
  • Provide envisaged infrastructure at the TM and
    the CC in the hub- and- spoke format
  • Establish backward linkage with growers in the
    catchment area of the TM through establishing the
    collection centers.
  • Progressively involve farmers and their
    organizations in the operation and management of
    the collection centers
  • Facilitate direct supply to processing units,
    retail chains and exporters, in addition to
    auction facility via the collection centers and
    terminal market

13
Key expectation from the private enterprise
  • Provide advisory services to farmers on inputs,
    prices, quality, multi modal transport and
    exports
  • Project DPR only illustrative. Project should,
    however, be designed to handle the minimum
    quantity of peak throughput (MT/day) and yearly
    handling capacity as prescribed.
  • Private enterprise at liberty to
  • Prepare own business model with regard to Size of
    market and Scale of operation
  • Set up additional facilities to provide
    complimentary services (input supply,
    processing, consumer goods etc.)
  • Collect user charges for the infrastructure and
    services provided
  • For basic services of aggregation at CC and
    auction at TM
  • User charge not to exceed 2 of the produce value

14
Expectation from the State Government
  • Reforms in APMC Act
  • To allow the private enterprise
  • Establish collection centres in the catchment
    area of the TM
  • Source material from farmers field directly in
    the catchment area of the TM
  • Organize supply to traders, retail chain,
    processing industry and to institutional buyers
    throughout the country
  • Cold storage/ warehouses of TM to act as delivery
    point for trading in perishables on the commodity
    exchanges
  • Pack house of the TM to act as exit point for
    exports

15
Expectation from the State Government
  • Regulatory clearances
  • Single license to operate in the entire
    State/adjoining States
  • Single point levy collection of market fee
  • Autonomy in commercial operations of TM
  • Clearance of land use for the TM/CCs
  • Provision of Civic amenities (including drinking
    water, municipal waste disposal, police
    security, post office etc)
  • Statutory clearance from
  • Local authority
  • Town planning Urban development
  • Revenue department

16
Expectation from the State Government
  • Play a pro-active role
  • Appointment of a Nodal Officer/Empowered
    Committee
  • to facilitate securing regulatory compliance
  • to remove difficulty in operation of the project
  • Identification of land for the TM/CC
  • Provision of Government land on long term lease,
    subject to availability and suitability
  • Infrastructure support to TM/CC
  • road connectivity, power and water supply etc.
  • States free to participate in the equity of
    Project
  • Direct funding
  • Land/infrastructure support

17
Role of the Central Government
  • Support the project through participation in its
    equity capital
  • Terms for financing
  • Up to 49 of project equity, including
    contribution from State
  • NHM/State will have the option to allocate its
    equity to farmers organisations actively
    participating in the business of the project
  • Private enterprise to be selected through an
    open, transparent competitive bidding process.
  • Project to be awarded to bidder with the request
    for minimum Government equity participation.

18
Outlay in 2006-07
  • Approved outlay for NHM
  • X Five Year Plan Rs.2300 crore
  • During 2006-07 Rs.1000 crore
  • Outlay for Terminal Markets
  • Participation in Equity Capital Rs.148.00
    crore
  • Project Development Assistance Rs. 1.00
    crore
  • General Awareness Publicity Rs. 1.00
    crore
  • Total Rs. 150.00 crore

19
Parameter Baseline status Expected outcome
Trade transparency Non-existing Transparent auctions through electronic auction system
Cold chain infrastructure poor Setting up of cold storage at each market ranging from 2000 to 15000 MT capacity
Backward-forward linkages poor Minimum of 20 collection centers nearer to the farmers field will be set up. The farmer will have alternative options to supply to the supply chains, processing, export of commodities etc.
Monopoly of APMC Markets prevalent Farmer is provided with alternative option of taking his produce to terminal markets.
Multiple intermediaries prevalent Length of the chain of commission agents will substantially be reduced with an ideal situation of eliminating the commission agents completely.
Beneficiary farmers -- 16000 to 20000 farmers under each terminal market.
Share of the farmer in the consumer price Varies from 30 to 60 for perishables depending on the location, season, demand and supply etc. Farmers share is expected to increase to 50 to 70 of the consumer price.
20
Risk Factors
  • Attractiveness to Private Enterprises
  • Availability of Suitable Land
  • Success in establishing backward linkages with
    farmers

21
Process so far
  • General Council of the NHM approved the concept
    on 14.12.05
  • Honble FM announced in the Budget Speech of
    2006-07 for setting up of Terminal Markets with
    an outlay of Rs.150 crore
  • National Conference on Terminal Markets held on
    20.02.2006 discussed with States and Private
    Enterprises
  • There is adequate enthusiasm among Private
    Enterprises on the proposal as seen in the
    responses to Expression of Interest

22
Way Forward
  • Approval of the proposal by October end
  • Finalization of Bid Process/ Bid documents by
    NIAM
  • Inviting the bids by States and selecting the
    private enterprise
  • National Executive Committee of NHM approves
    releases the equity
  • Project Execution
  • General Council of NHM monitors the progress

23
Agri Export Zones
24
India is the front ranking producer of many
perishable commodities
Cattle / buffaloes Largest in the world 283
million
Milk Largest Producer 91 Mn T
F V 2 in the world 151 Mn T
Fisheries Marine 2.7 Mn T Inland 3.1 Mn T
Food Grains 2 in the world (220 Mn T)
Tea Largest Producer (0.85 Mn T)
Sugarcane 2 in the world (245 Mn T)
Goat Sheep 182 million
25
Indias competitiveness in global markets
Source UN COMTRADE Statistics, World Bank Staff
Estimates
26
Exports of Agricultural Products, Why ?
  • Inherent Indian strength in Agriculture
  • Opportunities emerging out of WTO Regime

27
How did the concept of AEZ come
about ?
  • Analysis of existing export promotion
    measures for agri exports
  • Inability to address the entire value chain
  • Hence, the policy of Agri Export Zones announced
    on 31st March, 2001 under Exim Policy

28
What is Agri Export Zone ?
Agri export Zone attempts to take a look at
an identified produce/ product or a group or a
group of produce/ products sourced from a
geographically contiguous area with a view to
comprehensively addressing all the issues
relating to each stage of the entire value
chain, from farm to the ultimate consumer
29
Agri Exports activities
30
What does AEZ entail ?
  • Utilise existing interventions in a coordinated
    manner to promote exports (Convergence)
  • Partnership of farmers, processors, exporters,
    State Government agencies and Central Government
    agencies.
  • Focus on important issues.

31
What does AEZ entail ?
Fiscal Financial Monetary Administrative Lega
l Tariff Non tariff Related issues
Excise, Custom, Sales Tax, Mandi Tax etc. rebate
by central and State agencies Schemes of
APEDA, NHB, MFPI, MOA etc. Reduction in
interest on credit by banks Manpower
requirement for research extension related
activities Amendment of regulations with
regard to movement of goods, institutional
arrangement for consistent supply of produce
etc. Import of duties, product standards,
pesticide residues, Codex, etc.
32
Stages for setting up of AEZ ?
  • Preparation of proposal by the State Governments.
  • Clearance by the Steering Committee chaired by
    Commerce Secretary.
  • Signing of MoU between Central (APEDA) and State
    Govt. undertaking commitments
  • Nodal Officers appointed
  • Detailed action plan for each activity and
    monitoring by the inter departmental Coordination
    Committee.
  • Notification by DGFT
  • Advertisement by State Govt./Agencies inviting
    private investment
  • DPR and the execution of the detailed action
    plan.

33
Conclusion
AEZs on a MAP

34
Monitoring System
  • A web based monitoring system has been evolved
    wherein
  • Each activity as a part of detailed action plan
    is clearly defined
  • The agency responsible for undertaking such
    activity is identified
  • The time within which such activity has to be
    performed is clearly indicated.
  • State governments have committed a nodal agency
    for the purpose of coordination and the progress
    is monitored at the level of Chief / Addl Chief
    Secretary.

35
SOME SUGGESTIONS
  • Restructuring of Project Monitoring System
    (Single Window Concept for disbursement)
  • Blue Print Project Reports for attracting
    Investments
  • Market Intelligence Reports
  • Funding Mechanism to give liberty to state nodal
    agencies
  • Income Tax Incentive
  • Higher scale of Financial Assistance
  • Direct Finance by NABARD on concessional terms
  • Rebate on premium for crop insurance

36
Thanks for your attention!
This is not an end
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