The sector has seen transformation, but major changes are required in the long run
Food processing units are financed on a project-by-project basis mostly by the commercial banks and at times, co-financed by NABARD and a partner commercial bank and in certain cases on a consortium basis. While appraising these projects a number of limiting factors come to the fore rendering financing difficult.
The food processing industry seems to suffer from a vicious cycle of high unit cost – low demand – low capacity utilisation – high unit cost. High cost and poor quality of farm produce, high cost of power, cold chain, storage, handling, transportation, packaging, etc. are also serious problems. Low technology and absence of product innovation due to poor linkage between research institutions and farmers and industry is another serious problem. Unorganised and fragmented marketing and distribution network, long and fragmented supply chain leading to more number of intermediaries and consequently poor share of farmers in consumer price is also a constraint. Preference for fresh food and eating at home often contribute to the price sensitivity in the domestic market. Above all, there is a consistent lack of skilled manpower.
In order to address these problems especially that of skill formation, NABARD has been promoting large number of grant-based Rural Entrepreneurship Development Programme, Cluster Development, Development of Women Through Area Programme (DEWTA), Assistance to Rural Women in Non-Farm Development (ARWIND), Micro Enterprise promotion by SHGs et al. NABARD has also been working in close liaison with the Ministry of Food Processing Industry and other concerned organisations.
The Hon’ble Finance Minister had announced in the Union Budget 2006-07 that food processing would be treated as a priority sector for bank credit. Accordingly, the following items within the food and agro based processing sector were made eligible for classification as priority sector for lending by banks. (i) Fruit and vegetable processing industry, (ii) Food grain milling industry, (iii) Dairy Products, (iv) Processing of poultry and eggs, meat products, (v) Fish processing, (vi) Bread, oilseeds, meals (edible), breakfast foods, biscuits, confectionery, (vii) Aerated water/soft drinks and other processed foods, (viii) Special packaging for food processing industries and (ix) Technical assistance and advice to food processing industries.
The food processing industry seems to suffer from a vicious cycle of high unit cost – low demand – low capacity utilisation – high unit cost. High cost and poor quality of farm produce, high cost of power, cold chain, storage, handling, transportation, packaging, etc. are also serious problems. Low technology and absence of product innovation due to poor linkage between research institutions and farmers and industry is another serious problem. Unorganised and fragmented marketing and distribution network, long and fragmented supply chain leading to more number of intermediaries and consequently poor share of farmers in consumer price is also a constraint. Preference for fresh food and eating at home often contribute to the price sensitivity in the domestic market. Above all, there is a consistent lack of skilled manpower.
In order to address these problems especially that of skill formation, NABARD has been promoting large number of grant-based Rural Entrepreneurship Development Programme, Cluster Development, Development of Women Through Area Programme (DEWTA), Assistance to Rural Women in Non-Farm Development (ARWIND), Micro Enterprise promotion by SHGs et al. NABARD has also been working in close liaison with the Ministry of Food Processing Industry and other concerned organisations.
The Hon’ble Finance Minister had announced in the Union Budget 2006-07 that food processing would be treated as a priority sector for bank credit. Accordingly, the following items within the food and agro based processing sector were made eligible for classification as priority sector for lending by banks. (i) Fruit and vegetable processing industry, (ii) Food grain milling industry, (iii) Dairy Products, (iv) Processing of poultry and eggs, meat products, (v) Fish processing, (vi) Bread, oilseeds, meals (edible), breakfast foods, biscuits, confectionery, (vii) Aerated water/soft drinks and other processed foods, (viii) Special packaging for food processing industries and (ix) Technical assistance and advice to food processing industries.
Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
Prof. Rajita Chaudhuri's Website
domain-b.com : IIPM ranked ahead of IIMs
Arindam Chaudhuri's Portfolio - he is at his candid best by Society Magazine
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Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
IIPM B-School Detail
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).
For More IIPM Info, Visit below mentioned IIPM articles.
Prof. Rajita Chaudhuri's Website
domain-b.com : IIPM ranked ahead of IIMs
Arindam Chaudhuri's Portfolio - he is at his candid best by Society Magazine
IIPM Best B School India
Management Guru Arindam Chaudhuri
Rajita Chaudhuri-The New Age Woman
IIPM's Management Consulting Arm-Planman Consulting
Professor Arindam Chaudhuri - A Man For The Society....
IIPM: Indian Institute of Planning and Management
IIPM makes business education truly global
IIPM B-School Detail
