Code No: TIFAC:V:01:DR(M) Price: 3500 Category: Milk
Agro-food processing industries have been chosen as one of the Technology Mission Areas for more reasons than one. The share of the agricultural sector in the Gross Domestic Product (GDP) in ht Indian economy declined from nearly 5 5per cent in 1951/52 to 28 per cent in 1993/94. However, this structural change in output has not been accompanied by corresponding change in the occupational structure of the country’s labour force. Nearly 74 per cent of the country’s population live in rural areas.
A little over 60 per cent of the total labour force is still engaged in the agricultural sector.
The rural economy has so far been unable to absorb the increasing rural labour force in production activities and this has been a big constraint for reducing the incidence of rural poverty.
Agro-food processing industries have the potential to generate directly significant employment in production activities and also indirect employment through its forward and backward linkages.
This employment will be in rural areas where these industries have to be located near the source of raws materials, especially perishable agricultural products.
These industries would help in reducing post-harvest losses and wastes as well as in using byproducts more efficiently.
This can increase farmers’ income by getting them better prices and also consumer welfare by increasing the availability of agricultural consumer goods. The available vast potential in our country could be sufficiently exploited through:
(a) selection of appropriate scale and technology of production;
(b) upgradation of technology of existing units:
(c) establishment of suitable linkages between products and consumers at home and abroad; and
(d) establishment of suitable institutional arrangements.
The term “agro-food processing industries” covers a wide range of activities utilizing farm, animal and forestry based products as raw materials. There are certain traditional agro-based industries such as rice and flourmills, sugar, khandsari and gur manufacture, edible oils and the processing of plantation crops like tea, coffee and cashew nuts.
There are also some relatively modern food processing industries such as dairy products, confectionery, marine products, horticultural and vegetable products as well as meat and poultry products. In addition, there is also a limited extent of processing of agro-wastes and by-products of main agro-based industries.
Due to this wide range of activities, there is a lot of diversity in the nature of problems and issues relating to different agro-food processing industries. It is, therefore, difficult to envisage an overall technology policy framework covering the various agro-food processing industries. This report has chosen to concentrate on a few sectors where in the introduction of modern technologies has the potential of creating a substantial impact on the rural economy and improving the income of the rural population.
Any technology policy relating to agro-food processing activities apply differently in the case of different activities depending on the purpose of processing. Some processing refer to necessary processing that must be done before consumption.
Cereals sector belongs to this category of processing. While such processing is already being inn the country, introduction of modern technology in this sector is considered to be beneficial in two ways.
It would improve the efficiency of processing in terms of higher recovery of desired products. Secondly, it would create a number of potentially useful byproducts, some of which are not being fully utilized at present or not utilized in optimum way for producing higher value added products.
Although most of the technology is readily available in the country, it is not being extensively adopted because economic incentives are often mission, or institutional arrangements for collection, processing and marketing of he byproducts may be lacking.
Since the processing of byproducts in the cereals sector constitutes introduction of new manufacturing activities, or the expansion of existing ones, such activities would generate additional employment.
The next category of food processing concerns processing and packaging in order to provide easy transportability and marketability of some food products. The processing of milk and milk products falls in this category. This would increase the income of farmers, especially small farmers and landless agricultural labourers in the rural areas. It would also promote consumer welfare.
The third category relates to processing activities which would help in extending the storage life of seasonal food products. Fruits and vegetables belong to this category. Processing of fruits and vegetables would help in reducing post-harvest losses and would also provide stable income to the growers by eliminating the seasonal fluctuations in income.
A large amount of food processing activities in our country is still being carried on in the unorganized sector which includes household and non-household establishments.
The organized sector representing factory based production accounts only for a small share in the total volume of production. The organized sector is relatively more modern in technology requiring larger investments as compared to the unorganized sector.
However, processing in the organized sector helps in achieving higher efficiency in the use of raw materials and by products.
Processing in the organized sector generates additional employment in trade and transport activities additional employment in trade and transport activities which may be quite substantial as compared to direct employment created in processing activities.
At the same time, consumer welfare is enhanced by modern processing which ensures better quality and clean packaging in an uncontaminated environment. Export potential also improves.
In order to get a clear understanding of the technology issues in the food processing sector, this report has analyzed the current status and future vision of technology in three important sectors, namely (i) cereals, (ii) milk and milk products; and (iii) fruits and vegetables. A brief summary of this analysis is presented below:
The cereals sector occupies a very important place in the Indian economy. The value of cereals output accounted for a little over 41 per cent of the value of production of all crops.
Households spent around 49 per cent of their total consumption expenditure on cereals accounted for about 15 per cent in 1993/94. production of cereals in the country has increased quite rapidly from 69 million tonnes in 1960/61 to 177 million tonnes in 1994/95 as a result of significant incre4ase in yield levels brought about the green revolution.
The production of rice and wheat particularly has registered an annual average growth of more than 3.5 per cent between 1980/81 and 1994/95, which is much higher than the observed rate of growth in population of 2.1 percent during 1981-1991.
The rapid growth in cereals production has enabled our country to achieves self-sufficiency in food requirements. In fact, India ha now emerged as an exporter of cereals in the world market.
The present study has concentrated on four important cereals, viz., rice, wheat, maize and sorghum. The following table shows India’s share in world production of these cereals.
Table 1.1 Cereals Production: India and World.
|Cereal||Year||Production (Million Tonnes)||India's share (per cent)|
India exported nearly 0.8 million tonnes of rice in 1993/94 which is around 5 per cent of the total world exports of 15 million tonnes.
India exports mainly basmati rice. About 5.14 lakh tonnes of basmati rice were exported in 1993/94 while white rice exports were of the order of 2.54 lakh tonnes. The county has the potential to achieve rapid growth in rice export.
This is evident from the fact that the buffer stocks of rice was as high as 17.4 million tonnes in January 1995 as compared to the actual minimum stock requirements of 7.7 million tonnes.
The prospects of increasing rice exports can, however, be improved only by adopting better storage, processing and grading facilities. Modernization of storage and processing facilities in respect of rice as well as other cereals would help in reducing storage and processing losses on the one hand and making more efficient use of by products.
It is estimated that nearly 70 per cent of the cereals production is stored and consumed by the producers and the rural population. The remaining 30 per cent, which constitutes the marketable surplus, is stored by traders and other procurement agencies like the Food Corporation of India.
The storage losses are quite high (estimates vary from 0.5 to 10 per cent by weight) because of the nature of packing and in efficient handling. Much of the storage and transportation losses could be reduced through improves, modern storage facilities and bulk transportation of grains.
Current Status: Processing
Cereal processing sector consists of two segments, viz. the unorganized and the organized sectors. It is estimated that there were about 136,247 rice mills in India, but of this 66 percent was mainly huller and only 25 per cent was modern rime mills, however, in terms of total milling capacity, the huller accounted for only 36 per cent while the modern mills had a share of 55 per cent.
The hullers were employment intensive, but they were also energy intensive and had a very poor recovery rate as compared to the shellers and modern mills as shown in the table below:
Table 1.2 Characteristics of Rice Milling
(Per Metric Tonne)
|Type||Average No. of persons employed||Average HP used (percent)||Rice recovery (percent)||Broken rice|
Although hullers are less efficient than shellers and modern mills, their importance lies in the fact that they can be used for custom million of small quantities.
Hence they are indispensable I the current socio-economic context where subsistence farming is predominant. Efforts have been made to develop an efficient substitute for hullers and a single unit compact mill (mini-mill) will be capacity ranging from 300 to 1000 kg per hour had been designed.
These mills have not succeeded because of the high initial costs and also maintenance costs.
While modernization of rice milling does not obviously offer much scope for generation of additional employment, it has great potential for reducing the recovery losses ad for improving the utilization of byproducts of rice milling.
It is estimated that there is a potential of producing about 5 million tonnes of rice bran which can yield upto 7 to 7.5 lakh tonnes of bran oil. However, only 4.5 lakh tonnes of oil is extracted.
The available potential for collection and processing rice bran has not been fully exploited on account of the use of hullers wherein bran is not recovered separately and the quality of bran obtained is also poor.
Modernization or rice mills even on a limited scale would provide enormous opportunities for utilizing by products more efficiently. However, modernization has been constrained not merely by the investment cost, but also by the procurement policies of the Government which constrain the mills in achieving economies of scale.
These policies need to be modified suitably to facilitate modernization.
The position with regard to storage, processing, recovery ad transportation losses as well as utilization of byproducts in respect to wheat, maize and sorghum is more or less the same as in the case of rice.
With a view to understand the current status of technology and analyze the issues connected with modernization of cereal processing activities, we have carried out a survey involving interaction with the relevant technological experts, processors and others.
On the basis of the analysis, we have formulated certain recommendations for policy action in the short, medium and long-term in the cereal processing sector. This action plan along wit the names of the nodal agencies is give in Appendix I.
2. Milk Sector
India is currently the second largest milk producer in the world after the United States. The Value of production of milk and milk production 1992/93 has been estimated at Rs. 38292 crores which accounted for 66 per cent of the value of out of the entire livestock from sector.
Milk production in the country increased from must 17 million tonnes in 1950/51 to 31.6 million tonnes in 1980/81 registering an annual growth of 2.1 per cent.
However, the country has witnessed a phenomenal growth in milk production during the 1980’s. Production increased to nearly 61 million tonnes by 1993/94 recording an annual growth of 5.2 per cent during the period 1980-1994. this rapid growth in milk production could largely be attributed to the successful implementation and expansion of the “Operation Flood” programme which has to be more popularly known as the ‘White Revolution’ following the Green Revolution” in the production of cereals.
The most important technical intervention made in the dairying sector in India was the “Operation Flood” programme which helped in converting a highly perishable commodity like milk into a commodity that can be stored over for long periods and traded across the country through a national network of storage and transportation facilities.
Milk now moves well over 12500 lm right across the country through rail and road linking deficit areas with the surplus areas and in meeting the rising demand of urban consumers.
The programme now covers 170 milk sheds (catchment areas) and organized marketing of milk has been extended to 525 towns in the country. This involved provision of animal health care services and development of procurement, processing and transport facilities.
Apart from increasing the availability of milk and milk products at reasonably stable level of prices, the dairying sector has the potential to bring about an economic and social transformation in India’s rural economy because of certain specific features.
Milk production in India is characterized by the fact that almost every farmer and a large proportion of landless agricultural workers are milk producers.
An average Indian farmers has first about one hectare of land of which only about 30 per cent areas is irrigated and the cropping intensity is only 1.3. a typical farming family consists of 6 members and ha 3 cows or buffaloes of which only one is usually in milk. India has around 100 million farming facilities and bovine population of 250 males over 3 years).
A farming family producers only about 520 kgs of milk per year.
Indian agriculture is also characterized by scarcity of land. Nearly two-thirds of milk producers are “small and marginal” farmers and landless agriculture workers.
On the other hand, around 73 per cent of the “medium and large” farmers who own more than two hectares of irrigated land, as shown in Table 1.3.
The medium and large farmers own only about 35 per cent of the cattle and buffalo population. Milk production in India is, therefore, essentially a small farmer activity based on family labour and a long tradition of rearing milk animals as part of the household.
Any technological thrust given to the dairying sector would, therefore, confer substantial benefits on the small and marginal farmers as well as the landless agricultural workers.
Table 2.1 Land and Animal Holding Patterns in India.
|Land owned||Milch animals|
|Landless agricultural workers||26.0||-||22.5||22.6|
|Small and marginal farmers||49.3||27.0||41.8||41.9|
|Medium and large farmers||24.7||73.0||35.7||35.5|
Studies carried out in the regions where the Operations Flood Programme has been implemented show that it has created a very favourable impact on the food intake, nutrition status, levels of income and standards of living of the households engaged in dairying activities as compared to those not engaged in dairying.
The programme has also produced many indirect benefits to the rural population. For instance, many interior villages have now telephone facilities at the milk cooperatives, a big communication gap which no one would have dreamt to bridge so easily.
Similarly, dairying ha helped the economic emancipation of women in many villages. Exclusive societies for women producers have been formed in some states like Tamil Nadu, where women have emerged as leaders and formed social groups to promote the welfare of women, especially those belonging to the economically weaker sections.
All these developments clearly demonstrated that dairying can establish itself as a very effective instrument of socio-economic change in the rural areas.
The dairying sector has also the potential to remain as a fast growing sector. Milk is a very valued food in India. The income elasticity of expenditure on milk is estimated at 1.5.
This figure could be even higher in the rural areas. With the rise in incomes, the population would consume more milk and milk products. Expenditure on milk and milk products accounted for a little over 9 per cent of the total household consumer expenditure for the economy as a whole.
Even a marginal increase I expenditure on milk would provide a substantial boost to the milk production.
Global trade in 1992 was of the order of $11 billion in milk powder, $9 billion in butter and $ 3.5 million in cheese.
India’s exports of dairy products are quite negligible. It is only in the last two years that small quantities of milk powder were exported as some surpluses were available.
However, the export opportunities are likely to become more brighter in the coming years in view of the phased reduction in subsidies given to milk producers in the developed countries and the opening up of their markets as a result of the new international trading arrangements envisaged after the Uruguay Round of trade negotiations.
There are, however, several constraints to increasing exports of our dairy products. The main constraints are poor Quality of raw milk, high level of pesticide residues, heavy metal content and the stringent packaging and labelling requirements in the international market.
Hence, unless we are able to successfully overcome all these constraints, it would be difficult to exploit fully the newly emerging export opportunities even if surpluses are available.
The present study has carried out a detailed analysis of the current scenario in the mil sector. It has been found that further development in this sector is constrained by several factors which are listed below:
(i) Large number of unproductive cattle. Although India accounts for 344 per cent of the world cattle population, its share in global milk production is only 12 per cent.
(ii) Low milk yield: The average yield of milk per cattle in India is only 522 kgs as compared to 6555 kg in Denmark, 87067 kg in the United States and 9291 kg in Israel.
(iii) Absence of a national level breeding policy: Greater attention needs to be given to the up gradation of the quality of cows over wide areas in the southern and eastern regions of the country since milk yields of buffaloes have shown substantial, improvement, especially in the northern and north western regions. Scientific breeding of cows on a large scale is an important stake.
(iv) Many states are adopting inconsistent milk production policies which need to be rectified.
(v) Good quality feed is used only on a very limited scale due to faster increase in feed prices as compared to milk prices.
(vi) The facilities for animal health care are quite inadequate. Major diseases like under pest and FMD are yet to be eradicated. Expansion of veterinary services has to be give a high priority.
(vii) Dairying continues to remain as a secondary occupation, characterized by limited number of organized milk farms and limited adoption of scientific management techniques.
(viii) The chilling facilities are inadequate leading to higher frequency of collection.
(ix) Inadequate education and extension services are big handicaps to the farmers.
(x) The unorganized sector still dominates in milk production and distribution. The organized sector processes only 1.2 per cent of the total milk production.
(xi) The infrastructural facilities for collection and transportation of milk are quite poor.
The Operation Flood Programme has definitely played a vary important role in increasing the production and marketing of milk.
There are nearly 67,000 cooperatives of milk producers in the country with a total membership of 8.7 million producers.
Milk marketed under this programme has risen from 2,.8 million linters per day in 1980/81 to 8.6 million liters per day in 1993/94. on the other hand, the organized private sector has so far confined itself to the production of value-added milk products like infant milk food, milk powder, dairy whiteners, malted milk foods, chocolates, etc.,
The dairy industry has now been delicensed which enables the private sector to expand its share in the production and marketing of milk products. The potential for the expansion of the organized sector exists since around 75 per cent of the milk marketed in the country is done through traditional private trade.
The organized sector, mainly the cooperatives, has become the price/quality leader in the market which ahs ensured reasonable prices for both the milk producers and the consumers. This should facilitate the expansion of the organized sector in milk processing and marketing.
On the basis of the detailed examination of the current status of technology in production, processing, transportation and marketing of milk, the present study has made some detailed recommendations in the form of an action plan to facilitate the formulation of appropriate policy strategy in the short, medium and long term for the dairying sector. This action plan is given in Appendix 2.
3. Fruits and Vegetables Sector
The immense diversity in agro-climatic conditions across the different regions enables India to produce a large variety of fruits and vegetables that are generally grown under sub-tropical and temperate climatic conditions.
The value of fruits and vegetables production in 1992/93 was of the order of Rs. 20.94 crores accounting for 12.3 per cent of the value of output of all crops. India produced nearly 32 million tonne of fruits in 1993 which accounted for 8.6 per cent in world production of fruits.
The production of vegetables in 1993 is estimated at 71 million tonnes which formed 15 per cent of world production. The total area under vegetables cultivation is 6.2miikllion hectares which is about 3 per cent of the total area under cultivation.
The major fruits grown are banana, mango, citrus, guava, grapes, apple and pineapple which constituted nearly 80 per cent of the total fruit production in the country. Banana has the largest share of 31.7 per cent in total fruit production, followed by mango with 28 per cent.
Production of mango has remained almost stagnant during the decade 1983-93.
However, a few other fruits had registered very high rates of growth I production. The annual growth in production during 1983-93 was 9.6 per cent in the case of banana, 10.3 per cent for papaya, 9.4 per cent for grapes and 4.7 per cent in respect of citrus fruits.
The major fruit producing states are Andhra Pradesh, Maharashtra, Karnataka, Bihar, Uttar Pradesh, Tamil Nadu, Kerala and Gujarat. These eight states account for 70 per cent of the area under fruit cultivation and 78 per cent of the total fruit production.
The yield levels of most of the fruits are, however, relatively low as compared to those in other major fruit producing countries.
There exists considerable scope for improving yields and hence production levels of almost all fruits.
Although India is a very large producer of fruits, the per capita production is only about 100 gm per person per day. Further, about 25 to 30 per cent of the total production is lost due to spoilage at various post-harvest stages. In value terms, the post harvest wastage and losses per year are estimated at over Rs. 3000 crores. Because of these losses, the per capita availability of fruits is only of the order of 75 gm per person per day, which is just half of the requirements of a balanced diet.
Out of the total production of fruits and vegetables, nearly 76 per cent is consumed in fresh form, while wastage, and posses account for 20 to 22 per cent. Only 2 per cent of vegetable production and 4 per cent of fruit production are being processed. This is in sharp contrast to the extent of processing of fruits in several other developing countries such as Brazil (70 per cent), Malaysia (83 per cent), Philippines (78 per cent) and Thailand (30 per cent).
It is significant to note that the current installed capacity can process only 3 to 4 per cent of there total production of fruits and vegetables in the country. There were around 4100 to 4200 processing units licensed with an installed capacity of 12 lakh tonnes. The actual production in 1993 was only 5.6 lakhs tonnes implying a capacity utilization of less than 50per cent.
Being seasonal in nature, the units operate for less than 150 days in a year. There is significant processing, especially in thee cottage and households sector, for preservation and production of items like pickles, chutneys and syrups, accounting for 75 percent of the total units while the small scale sector has a share of 15 per cent and the large scale sector accounted for only 10 per cent of the total units.
The government has initiated several policy measures for encouraging exports of processed fruits and vegetables. As a result, exports of these products have increased from Rs. 122.5 crores in 1990/91 to Rs. 332.4 crores in 1993/94. Mango and mango based products accounted for Rs. 118 crores while exports of processed vegetables amounted to Rs. 160 crores.
Onion accounts for over 90 per cent of exports of fresh vegetables. India’s share in word exports of fresh and processed fruits and vegetables was quite insignificant being just 1 per cent.
The demand for processed fruits and vegetables comes from both the domestic and export markets. In the domestic market, a substantial share is contributed by defence, hotels and restaurants. Household consumption accounts for less than 50 per cent of the production. India’s exported are constrained by several factors such as poor quality, lack of standardization and unattractive packaging.
It is evident that there is considerable scope for expansion of processing of fruits and vegetables. Development of processing industry on modern, scientific lines would produce a variety of benefits.
Firstly, it will significantly reduce the magnitude of post harvest wastage and losses. Secondly, it would generate employment opportunities on a significant scale both directly in processing activities and indirectly in trade and transport activities.
Thirdly, it will also encourage more intensive cultivation of fruits and vegetables over larger areas. It is difficult to estimate the total gains from expansion and modernization of fruit and vegetable processing activities.
But there are several major constraints in accomplishing this task.
These constraints can be broadly grouped into two categories viz., (i) constraints faced by the farmers and growers, and (ii) constraints faced by the industry –including both who are involved with marketing of fresh fruits and vegetables and the processors.
Constraints of growers
The important constraints are listed below:
i. The average Indian farmer is poor and is unable to invest in high quality planting material and also not fully aware of modern agro-economic practices. The productivity is, therefore, quit poor.
ii. High quality planting material is not always available in sufficient quantities.
iii. The existence of long marketing channel with a large number of middlemen results in low returns to the growers.
iv. The storage and transport infrastructure is highly inadequate resulting in high post-harvest wastage and losses.
v. The average Indian farmer is hesitant to take up horticulture which requires high investments, long gestation periods and uncertain returns.
Constraints of processors/industry/exporters
The major constraints are as follows:
i. The quality of fruits and vegetables is not uniform. This affects the quality of processed output and the acceptability by the consumers, especially in the international markets. The poor quality also leads to high costs of processing.
ii. The domestic demand for processed products is quite low due to seasonal availability of some fresh fruits or vegetables through out the year.
iii. The processing industry ha to depend on a large number of small growers to procure the raw materials. It is difficult to develop exclusive captive sources of raw materials due to the land ceiling act. The industry faces operational difficulties in obtaining raw materials of desirable standards and quality from a large number of growers.
Constraints of consumers
The foremost constraint is the high cost of processed fruits and vegetables. Apart from the cost of raw materials and conversion costs, the high level of taxes on packaging materials and the various state levies contribute to the high costs faced by the consumers.
Current status of technology
The technologies currently used for different post-harvest operations are:
i. Harvesting: Mostly by hands or neither the help of hand tools such as clippers, scissors, etc.
ii. Sorting/Grading: Very limited. Mostly by visual inspection. Some large marketing agencies use weight based grading systems.
iii. Precooling: Limited facilities (forced draught type) for grapes, strawberries, etc. and mainly for export purposes.
iv. Packaging: mostly bamboo baskets and wooden boxes for domestic markets and corrugated fibre board (CFB) for exports. Controlled atmosphere (CA)/Modified Atmosphere (MA) packaging technology is available, but not used commercially.
v. Transportation: Mostly open vehicles. Limited use of refrigerated vehicles and trains which are mainly earmarkd for exports.
vi. Storage: Mostly ventilated storage used at the farm level. Use of cold storage at mandis is very limited.
Technologies used for processing
There are large variations in the technologies currently used for processing in the large and small scale units. The small scale units use mostly traditional methods. e.g. manual preparations, air/sun drying, batch pan concentration, etc.
The preparatory activities like grading, sorting, cleaning and slicing are done mostly manually except in a few large units. The large scale units up semi-automatic/ automatic processing units.
Future vision of technology
The present study has carried out a detailed analysis of the scope and potential for introduction of modern technologies at post-harvest and processing stages in the fruits and vegetables sector.
On the basis of this analysis, a detailed action plan has been prepared for the short, medium and long-term strategy for this sector. This action plan is presented in Appendix 3.