While India is the third-largest agriculture producer in the world, it doesn’t figure in the top-9 exporters of food items because of poor infrastructure for primary processing, packaging, grading and inadequate cold chain storage facilities. The sector is yet to realise its full potential in terms of yield, processing and exports and, given the country?s agro-climatic conditions, the sector fulfils only 50-60% of the potential yield for most crops.
Private investment in processing, branding and marketing, which drove the agriculture and food sector in several countries, is yet to take off in India and foreign direct investment in this sector has not been very encouraging. A McKinsey report points out that while the share of food processing is less than 10% of production in India, in other countries it is between 30-50%. It says a competitive agriculture sector and superior quality nutritious food could make India one of the top 5 exporters of agriculture and food products, and cement India?s place as a true global powerhouse.
With increasing urbanisation and disposable incomes, Indians will demand higher quality food products, which will make branding and processing industries important. In fact, packaged food is likely to grow by 9% annually to become a R6 lakh crore industry by 2030 and the McKinsey study revealed that branding could drive enhanced price realisation of packaged foods by up to 30% and modern format retailing could play a positive role by providing multiple organised touch points to the consumer. And this front-end transformation could boost the food processing sector.
