Increase in food production

• The agriculture sector in India contributes around 30% of the GDP and accounts for over 60% of employment in the Indian economy. The agriculture sector is one of the key drivers for growth in the economy
  
  
• India has around 11% of the world’s land under agriculture. It has one of the most intensively cultivated (51% of total land) area in Asia. (FAO Annual Report 1997). Increasing pressure on land has led to increased land holding fragmentation and smaller land holdings
  
  
• The average growth of the agriculture sector since India’s independence has been 2.7% per annum.The growth in agriculture would need to be stepped up to 5% p.a. in the Ninth Five Year Plan period to feed our growing population and to meaningfully participate in world trade
  
  
• The country has been able to meet its food requirements inspite of an increase of more than 2% per annum in its population
  
  
• India’s food production is equal to that of US and second only to China at Rs. 280,000 crores
  
  
• The yields for agricultural produce have improved but except for a few cash crops these are below the world averages

Issues and Action Plan :

Issue 1

Other than NABARD, there is no national level development finance institution to fund the Food and Agri processing sector. Its activities cover a wide spectrum of areas leading to a lack of focus on specific and specialised sectors within the food & agro industry

Action Plan 1

Set up an autonomous Food Development Bank of India (FDBI) along the lines of National Housing Bank/HDFC for funding all post harvest activities of the agro and food processing industry and the supporting infrastructure sectors like transportation, storage etc.

The bank should have

• specialised techno-commercial skills for food & agro processing
  
  
• project evaluation skills for funding specialised activities
  
  
• equity funding by the Development Finance Institutions

Setup Agriculture Development Finance Corporations (ADFCs) in each state as announced in the Budget’98, for developing the mechanism of credit delivery within each state. NABARD should focus its activities on re-financing and monitoring these ADFCs

Issue 2

The current system of institutional credit to the farmer suffers from

• Farmer unfriendly procedures
  
  
• Lack of adequate credit to the farmer at the appropriate rate of interest
  
  
• Delay in credit delivery to the farmer
  
  
• Imbalances in credit delivery

which make the farmers resort to non-institutional sources of credit at high effective rates of interest

Action Plan 2

Banks should be allowed to set interest rates for farmers with land holdings above two hectares. Concessional finance at 10% interest should be offered for farmers who own less than two hectares

Simplify loan application and documentation procedure

• allow crops to be surety for working capital loans
• abolish stamp duty on land mortgage
• empower the Branch Managers to approve 90%of loan applications
• involve local NGOs and grass root organisations for educating the farmers, like the "Grameen Bank" in Bangladesh

Introduce legislation to ban holding of loan melas. Loans should be rescheduled rather than waived

Introduce one time recapitalisation of Regional Rural Banks and Cooperative Banks

Allow cooperatives to raise money in the market

Review the scales of finance available for different regions, crops and holding sizes

• Review finance fixed for different crops
• Introduce annual review of scales and provide for interim review
• Allow differing scales according to different agro climatic regions within the same district
• Introduce a slab system on the basis of which guarantee and collateral requirements can be laid down

Announce special package for Horticulture, Floriculture and EOUs

• Provide Term Loans to Capital Intensive sector @ 9% - Horticulture Board could subsidise
• 3 year moratorium on repayment of term loans and interest
• NABARD to provide 100% refinance to banks, financial institutions at their rate of interest
• Extend NABARD refinance to State and All India Financial Institutions

Rationalise the interest rates for the priority sector making it viable for the banks and also reduce the burden of non performing assets of the banks

Introduce tripartite agreement system between the State Governments, the farmers and the agri industries as is being done in AP for palm oil

Issue 3

Public Sector gross capital formation in agriculture has declined from Rs 1796 crores in 1980 to about Rs 1132 crores in 1996-97. During the same period, private sector investment in agriculture increased from Rs 2840 crores to Rs 5867 crores. From 1990-91, even though there has been a marginal increase in public investments, yet the per cent increase in public investment has fallen. The Plan Allocation for Agriculture remained constant at 5.8% for the Sixth and the Seventh five year plan and declined to 5.1% in the Eighth five year plan

Action Plan 3

Increase the Plan allocation for Agriculture sector by two per cent i.e. increase from 5.1% to 7.1%.

Encourage greater private investments in agriculture and related sectors by

• Creation of Special Purpose Vehicles (SPVs) for Agri Industry investment in the agricultural infrastructure sectors like irrigation and rural roadways
• Follow the Maharashtra model for recovery of operational and maintenance costs for the use of infrastructural facilities like water, power etc.
• The Central Government should announce grant of matching funds to those state governments which enable recovery of costs through legislation

Issue 4

Poor protection for farmers due to the lack of an adequate insurance scheme. The current Comprehensive Crop Insurance Scheme

• is complicated
• does not cover all crops
• has a complex system for loss assessment
• is not widely accepted by the farmers

Action Plan 4

Announce and introduce a revised and simplified crop insurance scheme which should

• Have farmer friendly administration
• Cover all crops
• Cover even farmers not taking loans
• Charge actuarial rates. Provide for subsidy for small and marginal farmers, within the scheme . Impose a cap on such subsidy
• Cover input costs
• Provide for reimbursement in kind, e.g. fertiliser, seeds and also cash requirements of the farmer following a year of loss

Expedite the setting up of Agriculture Insurance Corporation to develop a regular and streamlined infrastructure for providing insurance cover to all farmers and crops

Issue 5

Of the total agricultural land in India only about 35% is under irrigation.Most of the agricultural production in India is therefore dependent on the monsoons for the following reasons :

• Lack of maintenance and upkeep of existing irrigation systems due to lack of funds
• Although the number of tube wells and pump sets has increased, many of them remain idle due to non availability of power
• 300 medium or major irrigation projects are lying incomplete leading to blockage of funds and escalation in project costs

Action Plan 5

• As per World Bank estimates every 1% increase in total irrigated area generates 1.6% increase in crop output and an ROI of 17%. There is a potential to extend irrigation facilities from 38 million hectares to 58.5 million hectares. Currently every year, about 1.8 to 2 million hectares of land are added to the gross available irrigated land. All future five year plans should target to add atleast 20 million hectares i.e. double the current rate

• Use remote sensing technology to harness minor irrigation resources even in hilly and rocky areas
• A Task Force to immediately implement 75% of the excising 300 incomplete irrigation projects. This should be completed between 2-3 years
• Make water a national resource for the purpose of pricing. All States must review water rates. The Maharastra model of announcing a five year policy of water pricing should be the model for other states
• The unharnessed ground water potential for irrigating 45 million hectares should be tapped

• Provide legal support for water users associations by providing full financial autonomy and accountability.Specify upper and lower limits for water charges and allow them to fix their own rates. Replicate Andhra Pradesh Legislation model in other States
• Review the functioning of the National Water Development Agency. Increase frequency of meetings with States to resolve issues

Issue 6

Large amounts of land are rendered unusable for agriculture due to either land degradation, salination or water logging. There is no transparent procedure to make this land available for use by the agro industry

Action Plan 6

• Allow use of wastelands for farming and use by Food and Agro Industry. Replicate the Wasteland Development policy of Rajasthan in other states for leasing of wastelands for agriculture and agro food industry
  
  
• Use Panchayats for identification of unusable, saline or water logged land. Allow them to reclaim such land through a joint cooperative of landless farmers and agro industry for cultivation, afforestation, plantation crops etc.

Issue 7

Poor quality and lack of rural infrastructure inhibits the growth and development of Agriculture

Action Plan 7

• Create a task force to review and synergise all efforts by various Government Ministries and Departments involved in providing Rural Infrastructure. Task Force should align its process for development of arterial roads to take care of the rural needs for movement of goods from the farm to the market and wage goods to the farm sector
  
  
• Prioritise expenditure on rural infrastructure. At least 40 percent of the expenditure to be targeted to specific crop or produce. Address key items of agricultural produce, identify the three or four major centers of production and build links in terms of roads, power and storage capacity for these specific items e.g. for onions at Lasalgaon and Niphad in Nasik
  
  
• Allow co-generation of power and direct sale to customers. Follow policy devised by Maharastra as an example

• Review NABARD Policy for loans to farmers for purchase of pumps and diesel sets. Incentivise purchase of power efficient and quality products, rather than least priced products. Develop an index for price determination and variation. Include mechanism to put pressure on manufacturers to improve quality and competitiveness
  
  
• Empower the officer at the block level to take decisions for allotment of land for development of support infrastructure for agriculture such as storage, warehouses, chilling plants etc.
  
  
• Delegate infrastructure funds to the Block Development Officers (BDO) for implementation of "Shramdan scheme"

Issue 8

The current method of forecasting of agricultural produce does not provide for any time to take corrective action in terms of crop failure or surplus. The recent example of onions, potatoes and the spiralling prices of vegetables is a case in point

Action Plan 8

• Set up National Centre For Crop Forecasting (NCCF) under the Ministry of Agriculture
  
  
• Use information technology in a collaborative project to develop a multi cropping map of India and forecast, predict and analyse cropping patterns, cropping intentions, project crop size, weather conditions, harvesting details, support price, mandi arrivals, Government stocks, mandi wholesale and retail prices and local prices. This project should not only cover cereals but also fruits, vegetables, and items of mass consumption. National Informatics Centre (NIC)should be involved in this exercise This should be extended to fish and marine products as well
  
  
• It should be made mandatory for officials at the block level to send this information on time. Any deviations should be recorded and mentioned in the annual review of the official
  
  
• This information should be widely disseminated through the proposed internet kiosks, radio and television on a regular basis. During procurement and sowing season this should be done periodically during the day.
  
  
• The government should collaborate with the governments of other countries e.g. USA and Brazil for utilising their experience for setting up forecasting centres
  
  
• Fishery Survey of India (FSI) needs to concentrate its operations on commercial surveys and building of databases. Also mechanism for dissemination of updated information should be developed using the modern Information Technology networks
  
  
• The existing institutions of CIFNET should be strengthened to train the fishery operators

Issue 9

Increasing amounts of agro inputs do not deliver commensurate returns as they did in the past. This is because of imbalances in their use due to the system of differential subsidy. This subsidy system encourages the farmers to use specific inputs. Excessive use of water, pesticide and fertilisers have also reduced the productivity of land and yield of most crops

Action Plan 9

It would be ideal to remove the subsidies. If they cannot be reduced,then the fertiliser subsidy should be reoriented to correct the imbalance in nutrients

Issue 10

The seed industry comes under the purview of the Seed Act ,1966, Essential Commodities Act, Weights and Measures Act, Consumer Protection Act and other restrictive acts/rules enacted by the state governments

Low yields of major cash crops like pulses, maize etc. and the horticultural produce due to

• Lack of HYV seeds for dry land farming
• Restrictions on import of seeds by the private sector

Action Plan 10

Consolidate the Seed Act 1966 and the Plant, Fruits and Seeds (Regulation of import into India) Order 1989 Act and other such acts into a single legislation to regulate, monitor and develop the production and availability of seed in India

Stimulate production and distribution of seeds

• Introduce effective Plant Varieties Protection Act to safeguard farmer
• State Government to set up Bio-Technology parks

Mandate select Agricultural Universities and Research Labs to focus research on the development of very high yielding hybrid coarse grains, pulses and items of mass consumption

Issue 11

Need for improvement in farm practices in most parts of India

Action Plan 11

• The Agricultural Universities, Krishi Vigyan Kendras and the Extension services need to be reoriented to aggressively promote and induct modern practices of farming in their respective areas. Funding to Agricultural Universities should be linked to success
  
  
• Encourage regional specialisation in crops through specific efforts of Agricultural Universities to develop schedules for optimum levels of use of inputs
  
  
• Each of the Agricultural Universities have large tracts of land. 50 percent of these should be used to develop and run model farms
  
  
• Encourage multi-cropping to increase land rejuvenation e.g.. Soyabean in Madhya Pradesh
  
  
• The Krishi Vigyan Kendras should cover all areas in the district and only focus on crops appropriate for that area

Issue 12

Low levels of farm mechanisation in agriculture. Benefits of mechanisation have so far been confined to the wheat based cropping system

Action Plan 12

• Establish a National Agri and Food Sector Mechanisation Council to provide direction and monitor progress of agri and food industry mechanisation
  
  
• High technology farming must be encouraged by providing for low interest loans @ 8% for use of green houses, drip irrigation and machinery etc.
  
  
• Upgrade facilities and expertise available in selected ICAR institutes and State Agricultural Universities for testing and evaluation of agri machinery. Focus on four States in the first year and on four different crops. Allow Universities to set up industry sponsored projects
  
  
• State Agricultural Machinery Corporations should be allowed to enter into collaborative arrangements with farmers and farmer cooperatives to set up pilot projects for demonstrating impact of mechanisation.
  
  
• Allow State Corporations to lease equipment on a hire purchase basis to be funded out of the increased revenue due to enhanced farm output
  
  
• A tripartite binding agreement involving the farmer, provider of machinery and the government should be permitted
  
  
• Allow import of agricultural implements like small harvesters, Farmers in advanced countries have progressed far beyond India and have designed machines which have raised the productivity levels several times

Issue 13

There are very few training centers for farmers.. While the knowledge levels of farmers are excellent there exists a possibility of upgrading this. Currently there are no organised institutions to do this

Action Plan 13

Establish Farm Training Institutes on the line of ITI’s. As a first step, identify those ITI’s and Agricultural Universities which have existing facilities to enable farmer training courses to be carried out. Such Institutes should have full autonomy

Issue 14

The annual growth rate of expenditure on Agricultural Research and Education is woefully inadequate

Action Plan 14

• Increase research & development funding to double current levels
  
  
• Strengthen R & D linkages between farmers, Research Institutions, Laboratories and Agro Industry e.g. ICAR labs should be able to provide the outcomes of their research to agro industry for further development
  
  
• Focus research and development on the populous States of Bihar, Madhya Pradesh, Orissa, Uttar Pradesh and West Bengal
  
  
• Indian Council of Agricultural Research should become autonomous

Issue 15

The cropping pattern is heavily influenced by the farmers perception of risk and this is influenced by price expectations and the risk balance between crops. Currently support prices are for select crops only

Action Plan 15

• The government must encourage private trade to play an important role in the food grain economy. It should restrict FCI to procure cereals to the extent of targeted PDS requirement. Government should step-in only to avoid distress sale by the farmers
  
  
• A "floor" price should be fixed and not a "support" price
  
  
• Savings from the above for FCI would permit the government to announce the "floor" price to move crops

Issue 16

Fragmentation of land holdings has led to lower economies of scale due to low allocative efficiency, low investment and mechanisation. In many cases this has led to subsistence farming

Action Plan 16

Review policy governing land availability to Agro and Food Industry

Ideally repeal land ceiling act. If it is not possible, we have to find a special mechanism suitable to the Indian paradigm to use farmland for better efficiency. There are several ways to do this :

• Contract Farming
• Cooperative Farming
• Lease of Land

In fact all the models exist in India. What is required is to take the successful models and replicate them across the country

Contract Farming : Replicate the model followed for Palm Oil in Andhra Pradesh. Allow tripartite agreements involving farmers, producer ( agro industry) and government. This enables the contract to be enforceable

In order to attract ‘biotechnology’ and ‘ gene transfer ‘ for high quality products, horticultural crops should be treated as plantation crops like in Karnataka which has no ceiling and Maharashtra which has a ceiling of 1000 hectares

Allow consolidation of farming through the cooperatives of owners. Allow Cooperatives to enter into joint ventures with Agro Industry as a rule and not as an exception

Recommend "Command Area" concept as exists in the Sugar industry. The State Agricultural agency can be made a major instrument to ensure enforceability of the contract

Waive Stamp Duty on exchange of land and new acquisitions of land within the ceiling limits for a period of 5 years

Issue 17

Various Governments at the Centre and State level are involved in the provision of rural infrastructure. Many employment schemes are also subsidised to build rural infrastructure. The Rural Infrastructure Fund also funds schemes. This has resulted in a fragmented approach and rural infrastructure continues to remain inadequate

Action Plan 17

• Set up a National Rural Infrastructure Development Planning Board to coordinate the planing and implementation of projects. An initial identification of one integrated project in each state could be done. The Board should also identify selected projects which require marginal funding to improve infrastructure in key agri producing areas.
  
  
• The Board should have representatives from the farmers and panchayats. It should formulate a policy by which the infrastructure like irrigation, rural electricity and rural roads is managed by local bodies and they are able to charge for services

Issue 18

Poor farm management and cattle hygiene & health care practices leading to unhealthy cattle with low productivity/milk yield

Action Plan 18

• Research institutions, NDDB and Agricultural Universities should provide training and resources to farmers about veterinary extension and cross breeding. NDRI and NDDB should work towards genetic improvements in specific breeds of both cows and buffaloes by developing cross breeding of robust Indian varieties as also importing high quality genetic material , establishment of semen banks at state/regional level and by running programmes for upgradation of quality of semen and availability of proven bulls
  
  
• Improve veterinary services

Utilise and market the food we produce

Background :

The demand for food grains expected to grow at 4.5% per annum and is expected to touch 215 million tonnes by the year 2002

This increase in demand can be met by an increase in agricultural production and by a reduction in wastage during the harvesting, procurement and storage stages

The food chain in India from the farmer to the consumer involves several intermediaries leading to handling at multiple points and longer transit time. It is estimated that :

20% of the food produced in India is wasted. This is valued at Rs 50,000 crores approximately

This wastage is equal to the amount that the government spends on food subsidy by more than six times

Only 25% of the consumer’s rupees reaches the farmer as compared to 50% in developed countries

Only one fourth of the food grain production is stored at the organised level, I.e. Food Corporation of India (FCI) Central State Warehousing and primary Agricultural Credit Societies (PACs). The balance food grain is stored in traditional structures resulting in high wastages. Therefore storage and transportation of grains needs drastic improvement

We have a wide range of fruits and vegetables of both the topical and temperate varieties because of the varied climatic conditions in our country. Unfortunately, less than 2% of our produce is processed and the wastage is estimated as high as over 25% of the total production. The process of "preserving" fruits and vegetables will help in removing imbalances in supply and demand, spiraling prices and wastages

The cold chain system is primitive and under developed. The existing capacity of 1 million tonnes is primarily used for storage of potatoes. Administratively, there are 3 ministries handling the development of cold chains

While the centre has abolished Cold Storage act, State cold storage acts still exist and inhibit the fundamental development of this vital link to preserve our fruits and vegetables and reduce wastages

Storage, handling and marketing of non-perishables

Issues & Action Plan :

Issue 1

The food grain market of our country has distortions which inhibits the Agri Industry from entering it in a big way. The support price of major cereals announced by the Ministry of Food & Consumer Affairs is high - this also discourages private trade in the domestic and for export markets

Action Plan 1

Announce realistic "floor" price vis a vis current "support" price. The Central Government must announce the "floor price" of major cereals on the basis of commercial considerations and procure only targeted PDS requirement of food grains. The Agri industry will thus be encouraged to trade in wheat, rice and other cereals as only commercial considerations will be the basis of their "floor price"

Issue 2

While the Agri industry is allowed to trade in foodgrains, there are storage limits exercised by the State Governments under the Essential Commodities Act, 1955

Action Plan 2

With a view to encourage trading in foodgrains, the State Governments should be persuaded to abolish storage limits

Issue 3

The Food subsidy of the Government of India is estimated at Rs 9000 crores which includes Rs 1800 crores on FCI. This will keep increasing each year because of increasing pressure to procure more food grains, higher support prices and to keep the PDS rate at the same level for at least 2 years. Also, the PDS rate remains the same across the country. There is thus widespread leakage of wheat and rice as the differential between PDS and market price is very large

Action Plan 3

The PDS rate for wheat and rice should be targeted only at people below the poverty line. Savings as a consequence will enable the government to announce "floor" price for more commodities

The PDS rate should be increased each year and should be different for different states taking at least freight costs and other commercial factors into consideration

Leakages can be further reduced by also providing wheat packages wheat products like Maida, Sooji and Atta. This will ensure that hygienically packed products in small packs are given through PDS. Indian consumers can then move away from wheat ground at the "local chakki " to packaged atta like in Pakistan where 35% of wheat is converted into hygienically packed atta

FCI can look at the possibility of procuring targeted PDS wheat and rice over a full year (instead of doing it for only two months at present ) even from the private traders end at the farm level. This will significantly reduce interest costs for carrying wheat and rice for 10 months in a year

FCI is a major sales tax payer for food grains. It is recommended that sales tax can be abolished and instead a direct subsidy be given to the states

Issue 4

10 % of the food grains 20 million tonnes valued at Rs 20,000 crores is lost annually due to various types of post harvest losses. This is equivalent to the quantity of food grains that Australia produces in a year

Action Plan 4

An increasing emphasis on private trade necessitates that storage systems are developed at the farm level. Institutional credit will be required for this

The Agri industry will need to be encouraged to develop modern bulk handling facilities at the mandis which handle over 20,000 tonnes of grain. The State Governments should give land at extremely concessional rates to the private sector to develop integrated bulk handling systems and modern ware houses. These are capital intensive and have long gestation periods

Issue 5

The volume of food grain processed and handled by FCI (22 to 25 million tonnes) poses several infrastructural and operational constraints. In fact, FCI’s peak stock of foodgrain touched 36 million tonnes in July 1995

Action Plan 5

Sub contact warehousing to private trade. This will reduce losses in grain handling and operating costs.

Expedite decentralisation of procurement at the state level to reduce freight costs.

Indian railways should develop matching facilities with modified wagons for bulk handling. CONCOR should also develop specialized containers for food grains. Developing of railway sidings near storage silos and major mandis is also imperative

Issue 6

Negligible level of private sector participation leading to inadequate investments and low level of technology absorption

Action Plan 6

Allow and promote setting up joint ventures with grain handling companies around the world

Issue 7

There is no clarification of markets leading to inefficient allocation of resources

Action Plan 7

Identity and classify markets based on handling capacities

Markets handling more than 20,000 tonnes should be fully mechanised and automated and should have large storage capacities

Markets handling between 5000 and 20000 tonnes should concentrate on low cost efficient storage

Issue 8

Absence of developed systems for grading foodgrains especially wheat

Non availability of the appropriate inputs to the industry

Sub optimal prices for the farmers

Lack of information on cultivation of suitable grades

Action Plan 8

The agricultural regions of India differ dramatically in topography, soils and climate. Plant breeders from National Agricultural Institutes will need to develop new varieties of food grains like wheat and rice and maintain their uniformity. The grading of high yielding varieties (HYV) should not only be guided by the need of farmers but also by the quality requirements of customers in the domestic and export markets

Issue 9

With the increasing role of the private traders in the food grain sector of our economy, and the need to penetrate international markets in the next five years, there is a strong and justifiable case to develop "commodity exchanges" (futures markets) for select foodgrains like wheat and rice on an urgent basis

Action Plan 9

Commodity Exchange (Futures Market )

This is a market or base where buyers and sellers can meet, agree on prices, quality, delivery schedules and other terms of sale

The commodity Exchange will help in concluding an obligation to supply or receive a commodity

Provide facilities where trading can take place

Futures trading is not "Satta" at all. It allows free play of market forces. The Government should develop Futures Markets for key grains like wheat and rice on the lines of the "Chicago board of trade" and "Kansas city board of trade" in USA. It would be best managed by an autonomous organisation

Issue 10

Rice milling and parboiling - The total losses due to the use of hullers is estimated at 1.2 million tonnes in the form of rice powder. In the demilling operation there is an additional loss of 0.5 million tonnes

Action Plan 10

Rice parboiling with modern technology like the one developed by CFTRIs is the key to avoid these losses

Efficient parboiling techniques involving wet heat/dry heat with advantages of energy saving and cleaner technology should be encouraged

Issue 11

The Food Processing industry needs some quick action and demonstration effect from the government

Action Plan 11

Setup of "Food Parks" in the next twelve months

Orissa - Processed Fish

Goa - Cashew

Andaman - Coconut

Select milk & fruits as initial thrust areas

Select three states to change laws. In these states we need to create "village" enterprises like in China

Issue 12

Under the WTO regime subsidies which are supporting the European growers will come down gradually.This is a major area of opportunity for India

Action Plan 12

Select thrust areas and build a strategic plan to capitalise on this opportunity

Benchmark our yields to international standards

Storage, handling and marketing of perishables

Issues & Action Plan :

Issue 1

Cold chain facilities are woefully inadequate to meet the growing production of ‘perishables’ such as ‘milk’, ‘fruits and vegetables’, ‘poultry’, ‘fisheries’ for domestic and export markets. Why?

Poor quality of cold storages

Limited incentives for investment

Restrictions placed by State Government on cold storage orders

Action Plan 1

Cold chains in the private/ public sector should be treated as a continuous process industry and be awarded priority sector status. This includes

Giving the food preservation sector a priority for assured power as to hospitals and continuous process industries at concessional rate like the agricultural sector.

Ensuring that cold storages are supplied power continuously like hospitals as they are handling "perishables"

Empowering BDOs to allot land at nominal rates

Quickly sanctioning and alloting land land for setting up cold storages near producing centres

Facilitating investment by providing fiscal incentives for encouraging the creation of cold chains which are capital intensive and have long gestation periods. These include the following :

Credit by banks and financial institutions at prime lending rates

having a three year moratorium on loan repayments from the date of commissioning. Interest on borrowed funds during this period should be capitalised

giving tax rebates by allowing 100% depreciation on all cold chain equipment and freezer cabinets

allowing an eight year tax holiday

reducing basic import duty on cold chain equipment from 77.9% to 4% and exempting them from levy of special additional import duty

reducing excise duty on local freezer cabinet from18% to 3%

Technology and Training

CFTRI to obtain and disseminate information on modern technology on cold chain storage equipment

Industrial training institutes should include "cold storage" technology courses in their curriculum

Role of the Government/ Private Sector

The low energy low cost cold chambers which can store agricultural perishables upto 90 days can be funded by the Ministry of Food Processing

In the Agri Industry large investment would be needed for developing cold storages near "mandis". The current assistance to the private sector is a loan of 25% of the cost of the equipment upto a maximum of Rs2 5 lacs. It is suggested that this limit is raised to Rs one crore

Issue 2

Very high levels of wastage and value loss of horticultural produce

Action Plan2

Market yard operations and auctioning should be transparent

Encourage direct marketing of products by the farmers to cold storage companies. Cold storage facilities should be developed at all international airports in the country

Issue 3

The existence of a large number of intermediaries leading to high prices for the consumers

Action Plan 3

The concept of Value Added Centres (VACs) or Produce Consolidation Sheds (PGSs) as followed by Gujarat Agro Industries Ltd should be promoted to facilitate the consolidation of farm produce at the district level. The private and cooperative sector should play a larger role in the marketing of horticultural produce

Issue 4

A weak regulatory mechanism exists to monitor the conformity of imported food products to the Indian food regulations and standards. This has led to unfair competition for the domestic industry which confirms to the national standards

Action Plan 4

The system for monitoring the conformity of imported food products to Indian quality standards needs to be strengthened and made rigorous as is followed in other countries with respect to the Indian food products. The import policy should mention that such imports are allowed subject to meeting PFA and other food law requirements

Issue 5

Short shelf life and high wastage levels of fresh produce

The excise duty on packaging cost is as high as 18%

Action Plan 5

Packaging plays a very important role in increasing shelf life of perishables and reducing wastages. In order to encourage consumption of packaged "fresh" produce.The manufacturers of this fresh products which have nil excise duty should be allowed to claim back the duty paid on packaging material used .This will significantly reduce the price differentials between fresh and packaged produce for the consumer

Issue 6

The fruit and vegetable sector in India is underdeveloped. As mentioned earlier less than 2% is being processed as against 30% in Thailand, 70% in Brazil, 78% in Philippines and 80% in Malaysia

Action Plan 6

Identify select horticultural products as thrust areas

Facilitate investment by lending at prime rates and other incentives for developing cold chains, etc.

Issue 7

In the meat and poultry sector, an apex developmental body is absent

Action Plan 7

An apex autonomous organisation like ‘ National Poultry Development Board’ should be established which will promote the growth of poultry and meat sector and look into the problem areas

Recommend import of poultry breeds with better feed conversions

Issue 8

India is the seventh largest fish producing country in the world. Approximately 40% of 4.5 million tones is exploited

Action Plan 8

Adopt new technologies like freeze drying by import of capital equipment at concessional duties

Issue 9

A service tax on abattoirs is a disincentive to use clean and hygienic abattoirs

Action Plan 9

Removal of this cess/ service tax will help in creating mechanised slaughter houses

Issue 10

The Food Processing sector is expected to face a fund shortfall of Rs 10000 crores in the five year plan period. This business is inherently risky and funding agencies like NABARD, NHB, APEDA are typically funding only select ventures

Credit from term lending financial institutions has rarely exceeded 6% of the total credit extended to the industry

Action Plan 10

Utilise the newly created FDBI to focus on investments in the Food Processing Sector

Issue 11

Investment approvals in the Food Processing industry in the last 7 years was Rs. 70,000 crores. Actual implementation is only 15% . Mostly in soft drinks and liquor / beer

Action Plan 11

Task force to be appointed in Ministry of Food Processing to investigate reasons for non-implementation and formulate and set-up "single table" approval system

.Realign taxation for cost reduction and demand stimulation

Background :

The Central Government attaches the highest priority to agriculture, food processing and other agro based industries with a view to increase the income of farmers, create employment opportunities and diversify the landscape of the rural economy

The Indian farmer must be able to increase his income from agro and processed food products. Stimulating consumer demand and reducing the cost of production will enhance market opportunities for both ‘fresh’ and ‘processed’ foods. The high incidence of tax at the "intermediate" processing stage adds to production costs significantly, thereby, making the final products very expensive. It is also imperative that wastage of perishable foods is reduced to its maximum possible extent by modern preservation methods at the "intermediate" stage

The tax levels on the processed foods in India are among the highest in the world. No other country imposes excise duty on processed foods. Nowhere in the world is there a distinction between the branded and the unbranded food sectors for taxation. Some other glaring inconsistencies are :

Excise Duty in India ranges between 8% and 18% where applicable and excise duty on carbonated drinks is 40% on maximum retail price

Thailand levies excise duty on carbonated drinks and fruit juices only

Excise Duty is not levied in other countries

India is the only country to levy excise duty on machinery and equipment for processed foods

Indian consumers have high price elasticity and hence a reduction in cost is imperative for raising demand and consumption of food products. The multiplier effect of processed food products is 2.5 which is amongst the highest in the industry

Issues & Action Plan :

Issues

Production costs of processed foods are high because of unrealistic taxes. This has made them expensive and has suppressed their demand

Excise duty on processed foods

Wastage of fresh foods is extremely high in India as a large percentage of them perish before they can reach the consumer.This reduces their supply in the market. Hence, all encouragement should be given in terms of nil excise to encourage large and small scale industry to "preserve" fruits & vegetables at the "first stage of processing". The gains in "preserving" horticulture products are tremendous and will help in reducing the cost of production and ensure adequate availability round the year. Situations like the current onion crisis can thus be easily avoided

Even though the excise duty on processed foods in India is one of the highest in the world, the total amount of duties realised is almost negligible due to the low tax collection base. This is because the excise duties only cover the branded and the organised sector which hold a very small share in the processed food industry

Tax on branded foods

Branded foods attract a higher rate of sales tax as well as excise duty compared to the unbranded sector. It is reasonable to expect that any meaningful level of investment in this sector necessitates the branding of the product. It is important to note that in no other country are the branded foods treated differently for purposes of levying duties. The exemption of unbranded and unorganised sector from excise and sales tax leads to low quality consciousness amongst manufacturers and consumers

Octroi / entry tax on food products

India is the only country apart from Thailand to levy octroi / entry tax on food products.

India is the only country to levy excise duty on machinery and equipment. This calls for a higher capital expenditure from the investors in this sector, which acts as a deterrent to investment in this industry. Octroi / entry tax in India, represents an added cost on the product and machinery & equipment

Tax on basic foods

Most basic foods in India are sold in the unbranded and loose form. Such foods are not taxed and quality controls on them are negligible.In the interest of hygiene, it is imperative that all basic foods in the market place are subjected to strict quality standards

State levy cess on raw agri-products. This burden is not adjustable and leads to

inflating the cost of raw agri-products

restricted inter-state movement of agri-products

the cess on rice imposed by various states varies between 30% to 75%

Action Plan

Nil excise duty or sales tax for processed foods at the "first stage of preservation"

Reduction in excise duty on processed food from existing levels to 3%

Nil excise duty on packaging material for basic foods, like milk in tetra pack

No tax distinction to be made between branded and unbranded sector and uniform quality standards for both

100% modvat should be available on all inputs in the agro food processing industry

8 year tax holiday for investment in the cold chain infrastructure sector

100% depreciation should be allowed on freezer cabinets and other cold chain equipment

Total import duty on all capital equipment for food processing and cold chain sector should be reduced to 4%

Excise duty on local freezer cabinets to be reduced from 18% to 3%

Abolish cess on agri products to

encourage free movement of agri products

reduce the cost of agri products

Persuade state governments to reduce sales tax on basic foods in packaged form eg. wheat, rice, milk etc.

Food Legislation - Remove curbs and bottlenecks

There is a need for promoting food safety and quality

Background :

There is no issue of greater importance to the well being of the people than the assurance of adequate and safe food supply

Food is one of the essentials of life and it must be wholesome, free from contamination and offer nutrition and health

The basic objective of food legislation is to ensure safe, wholesome and fair trade practices in food supply at a cost that society can afford. This must be achieved through regulations that :

are realistic and enforceable

reflect current abilities of food science and technology

do not unduly infringe on the consumer and freedom of action of the manufacturers

There has been a progressive increase in the number of different legislations pertaining to the manufacture and sale of food. Concurrently there have also been several amendments to the existing Act and rules ( 3 amendments to PFA Act and 167 amendments to PFA rules). There is a need to streamline and harmonise food laws in line with world-wide trends. No country can act in isolation as the world food system has become quite interdependent

The Ministry of Health has a severe constraint on infrastructure which perhaps results in longer lead times for decision making and checking the food products being made available to the consumer. For example, there are only 4000 food inspectors against a minimum requirement of 20000 food inspectors in the country. Also, the 72 primary laboratories and 4 appelate laboratories are unevenly distributed across the country

Issues & Action Plan :

Background

Currently there are more than twelve laws relating to quality of food. The responsibilities for framing and enforcement of food laws in India are divided between a large number of different ministries & departments, including the Ministry of Food & Consumer Affairs, Ministry of Food Processing Industries, Ministry of Agriculture & Ministry of Health & Family Welfare etc.. There is a obviously a strong need to simplify this cumbersome administrative structure

Most countries in the world have unified and highly focussed enforcement of food laws through one or two ministries are completely responsible for food safety and quality standards

Issue

The multiplicity of laws and their respective governing bodies at the central and the state levels leads to multiple and varying standards for food products. Their complexity puts additional burden on the industry

Multiple administering authorities at the central & state level like the state health authorities, the health inspectors in the states and the municipal corporations, over which the central government ministries have little or no system of monitoring lead to an inefficiently managed system and unnecessary harassment to the food industry in general

Action Plan

The government needs to review all food legislation relating to the quality of all categories of food products and unify them into one legislation which would be governed by an independent and self sufficient body under the purview of a ministry like the FDA in USA. (The other product specific ministries and departments should only determine the policy and regulations relating to the developmental aspect in the sector.) A Food Regulatory Authority (FRA) should be set up

The following Acts/ Orders should come under the purview of the FRA

Ministry of Agriculture

Insecticide Act

Milk & Milk Products Control Order – (MMPO), 1992

Meat Food Products Order, 1973

Ministry of Rural Development

Agricultural Produce (Grading & Marking) Act, 1937

Ministry of Health & Family Welfare

Prevention of Food Adulteration Act, 1954

Ministry of Food Processing Industries

Fruits & Vegetable Products (Control) Order – FPO, 1955

Ministry of Commerce

Export (Quality Control & Inspections) Act, 1963

Ministry Civil Supplies, Consumer Affairs and Public Distribution

Standards of Weights & Measures Act & Standards of Weights & Measures (Enforcement) Act

The objective of the centralised body would be to formulate and update the food standards for all food products for the domestic, export and imported products and to promote and monitor the enforcement of these standards

The Central and State Governments should strengthen the enforcement agencies and restructure their operations to manageable and more efficient levels. The performance of enforcement agencies could be monitored on the basis of convictions to prosecution ratio, to reduce frivolous prosecutions which burden the judicial system and hamper the efficient functioning of the industry

The Jain Commission Report submitted in August 1998 should be released for public debate as it has recommended simplification of laws

Background

The PFA , 1954 needs to be updated to take care of the phenomenal changes in food technology, food habits and food composition to suit the needs of different classes of consumers. It should now be in conformity with international norms and standards. There is an urgent need to review the issues mentioned below:

Issue 1

Under the PFA act there is no provision for a storage simplicitor i.e. no food article is treated as intermediate or in-process which is not for direct sale or consumption and cannot harm or cheat the consumer. Hence, if a sample of any in-process food product is found to be adulterated, the food inspector can launch a prosecution against the vendor

Action Plan 1

The provision of a storage simplicitor should be incorporated in the PFA, to prohibit lifting of samples from any in-process / intermediate food products and allowing lifting of samples from only the final products which are meant for sale

Issue 2

Under the PFA when the food inspector takes the testing sample of a food product, he divides it into 3 parts for testing, of which one is meant for the Public Analyst and the remaining two are kept by the Local (Health) Authority for re-testing and verification purposes. No sample is provided to the vendor for testing or verification, which is unfair for the vendor

Action Plan 2

Whenever a sample is lifted for testing one sample should be given to the vendor for verification by getting it tested through any of the government approved labs

Issue 3

Under PFA if a vendor/manufacturer is dissatisfied with the report of the public analyst then the vendor/manufacturer has the privilege to ask for a re-testing of the sample by any Public Food Lab, but the report of the Central Food Lab is deemed to be final and overrides the report of the Public Analyst which is again an anomaly as nowhere in the world does one scientific opinion override another scientific opinion, particularly, when same methodology is adopted

Action Plan 3

The PFA should be amended so that both the Central Food Lab and the Public Analyst reports be treated at par in any court of law. (This provision exists in the UK Food Act)

Issue 4

According to the PFA Act, 1954, if a sample is found to be mis-branded or adulterated by a food inspector, the prosecution can be launched against the vendor/manufacture by the local (health) authority without any pre-prosecution hearing or consultation with the vendor/manufacturer regarding the cause of the mis-branding/adulteration. This gives rise to launching of numerous trivial prosecutions which overburden the judiciary and harass the industry. This provision also provides immense authority in the hands of the food inspector/local health authority which could be misused

Action Plan 4

The PFA Act should provide for a provision for Pre-Prosecution hearing or consultation between the vendor/manufacturer and the State Health Authority to provide for a chance of eliminating trivial prosecutions and corrective measures. (This provision exists in the Federal Regulation of US)

Issue 5

Under the PFA Act,1954,each food company is obligated to nominate a representative and inform the same to all Local (Health) Authorities in each state where its products are being sold. As every manufacturer/vendor is not aware of each and every local health authority in all states concerned, hence due to omissions in informing all Local (Health) Authorities this provision leads to prosecution of all the Directors including the Managing Directors of companies for small issues of minor offences

Action Plan 5

The manufacturer/vendor should only be required to give information about his nominee to State Food (Health) Authorities, who in turn should be obligated to inform all local health authorities.

As mentioned earlier there should only be one centralised Health Authority and the multiplicity of health bodies in each state should be done away with

Issue 6

The PFA does not provide for any time limit for the launch of a prosecution after the taking of the sample. The average time lag between the lifting of the sample and the launching of the prosecution in India is 1 to 2 years and during this long time lag the vendor/manufacturer is always worried about the fate of the sample and the result of the test report. Also as 1 to 2 years is a very long time span for the a product of a particular batch to remain in stable condition. Hence if a particular sample is found to be adulterated and the prosecution launched, the vendor/manufacturer is in no position to take any corrective action

Action Plan 6

The PFA should restrict the maximum time limit between the lifting of a sample and the launch of a prosecution to 6 months, or else the case be dismissed. Also as the report of the Public Analyst is released it should be communicated to the vendor/manufacturer and he should be allowed to request for a re-test by the Centre Food Lab immediately without waiting for the launch of the prosecution

Issue 7

The PFA does not provide for any scientific methods of sampling or analysis to be followed by all the food inspectors and analysing labs, leading to varied systems of sampling and analysis being adopted by various food inspectors and testing labs, which in turn leads to variation in analytical reports

Action Plan 7

The PFA should prescribe standard methods of sampling and analysis to be followed by all food inspectors and testing labs which should be made available to the industry as well

Issue 8

The PFA rules prescribe quality standards for about 300 food articles which are ‘recipe oriented’ and have low or no tolerance levels, rather than just prescribing the minimum safety levels as is followed in other countries, leading to a large number of prosecutions for very minor and non harmful deviations in the chemical composition of food products.This also acts as an obstacle to innovation in food products

Action Plan 8

The PFA rules need to be reviewed to adopt the approach of prescribing minimum safety levels in food products rather than the exact chemical compositions. Also the standards prescribed under the PFA Rules need to be reviewed to update them to the level of internationally prevalent standards

Issue 9

The penalty provisions under PFA prescribe a minimum penalty of 3/6 months imprisonment even for minor offences like mis-branding or labeling etc. which are not severe offences and do not prejudice the consumer. The PFA also lacks a mechanism for compounding of offences and grading of punishments. Hence the penalty provisions lead to unnecessary harassment of the industry and immense authority in the hands of the enforcers

Action Plan 9

The penalty provisions under PFA should be graded according to the gravity of the offence. The PFA Act should also provide for compounding of minor/economic offences or issuing a warning wherever Food (Health) Authority feels that such action serves the purpose

Issue 10

Inadequate infrastructure and laboratories hampers decision making

Action Plan 10

There is a need to persuade state governments to give adequate focus to the growing needs of public health by increasing recruitment of inspectors, increasing office space and also to have a closer co-ordination with the Ministry of Health

Non-alignment with international standards

Background :

CODEX is the International body under the WTO which prescribes international standards for quality of food products. India being a signatory to WTO would also have to adhere to all CODEX standards for domestic consumption and international trade by 2005 unless it can justify non adherence on dietary & scientific base for stricter regulations

Issue 1

The national food standards in India vary considerably from the CODEX standards, and Indian food standards need to be aligned with the CODEX standards. There is an immediate need by the government to align Indian food standards to international ones otherwise it might give rise to serious trade restrictions and loss of Indian brand equity in the near future

Action Plan 1

The Indian food standards for quality of food products need to be reviewed and harmonised with the CODEX standards and adherence to the quality norms of GMP/HACCP should be made mandatory for the industry over a period of next 3 years

Issue 2

India’s representation on international forums is inadequate. This results in harming our long-term interest in food legislation

Action Plan 2

The Industry and the government should work together to ensure that India is represented and fully heard at international forums. Quality standards should be amended keeping in mind our nutritional needs and public health issues

Long and subjective process of approval of innovation in standardised food products ...

Issue 1

Under the PFA Act, 1954, if a manufacturer uses an innovative process or a new ingredient/additive for the manufacture of a non-standardised food article in order to reduce costs and/or deliver incremental product benefits to the consumers, like special or improved flavour, colour, stability, etc., such category innovation is not permitted by the existing law.This kind of an innovation would require the approval of the Central Committee of Food Standards (CCFS) which operates under the aegis of the Ministry of Health & Family Welfare. The process of approval is highly time consuming (average period for approval is about 18 months or longer in India as compared to 90 days in the US) and is also subjective as it does not have an established objective system of evaluation either based on the recommendations of other International Scientific bodies like JECFA, US-FDA, CODEX, EEC Regulations etc., or based on the scientific opinion of the food research labs and institutions within the country. Also the CCFS is a large body comprising mainly of government representatives and a low representation of the industry & trade, thus leading to a less efficient and heavily burdened system. In the past 44 years of existence, the CCFS has met only 42 times

Action Plan 1

The composition and working of CCFS needs to be reviewed and rationalised in order make it manageable and proactive. The CCFS needs to meet at least 3 times in a year. The approval process of new ingredients and additives etc. needs to be time bound (6 months) and the objective criteria for approval of additives and new compositions within the time limit of approval should be specified by the CCFS . Whatever is adopted by international organisations like CODEX etc. should be considered as a special basis and approved with immediate effect. In the long term, the CCFS would need to be replaced by the governing body of FRA

Issue 2

The industry and consumer are not aware of the changes in laws and notifications announced by the Government

Action Plan 2

In view of the complexities of laws and notifications issued by the Government from time-to-time, NICNET should be allowed to participate to set up an ‘ Food Laws Information System’ (FLIS) whereby the information is easily accessible in all the states of the country

SHORT TERM

Issue 1

There is an overlap of responsibilities between Ministry of Food Processing and other departments of the Government of India. There are several agencies involved in joint appraisals, co funding concurrent monitoring and evaluation. The major one are the APEDA, MPEDA, Ministry of Commerce, Government of India, Cashew Promotion Development Council, National Cooperative Development Corporations and National Horticulture Board

Action Plan 1

Amalgamation of the above departments under a single Ministry of Food Processing will go a long way in effective decision making and enhancing India’s competitive position. Besides all plan assistance for one sector, say fruits and vegetables can be given to Ministry of Food Processing

LONG TERM

Issue 2

There are as many as 12 different Ministries and Departments which govern and administer the agriculture and agro-based sectors in India. Their tasks and responsibilities overlap in several key areas, leading to duplication in functioning. There is often great deal of confusion about the roles that they play.As a result, important projects in many key areas are "everybody’s baby but no body’s responsibility". Developmental activity and innovation in them gets slowed down and often even gets stifled because of the conflicting clearances, requirements that are required by the central departments that counter each other. For example, the setting up of cold storage chains, across the country which are vital to the development of the fruit, vegetable, wheat, milk and processed foods sectors has been proceeding at a snails pace because as many as four different departments are overseeing it. These are APEDA, Ministry of Commerce, Ministry of Rural Development,and the Ministry of Food Processing

Action Plan 2

Recommend one Ministry for Agri, Fisheries and Food like in the U K where it is called MAFF. The Ministry will still have its traditional role, but its concerns will go far wider: Our highly complex food chain involves not only production and processing, but also issues such as food safety, environment etc. The role of this Ministry will be to help improve the economic performance of there industries

An inter-ministerial task force should be set up to recommend the revised structure. In the interim a Cabinet Committee should be set up to plan, implement and monitor the progress of the Agriculture sector. All policy decisions impacting any section of the food and agri chain must be cleared by the committee under a time bound mechanism

Focus for exports

Background :

India is the second largest producer of food in the world but its share in the world’s food and agricultural products exports is very low despite the inherent strength of India in tea, spices and rice

The share of agricultural exports in the total export basket in India has been fluctuating, from 27% in 1985-86 to a low of 16% in 1994-95 and then up to 20% in 1996-97

During 1996-97, India exported Rs 24, 618 crores worth of agro products (Source: APEDA: Export Statistics). During the year1997-98, marine products, rice, coffee, oil meals and spices have been the major export items

The share of horticulture crops, plantation crops, meat and meat preparations and sugar in the country’s agri exports is much less than what the competitive potential warrants

Some concrete policy changes like reduction in duties, removal of restrictions, and delicensing of some agro exports will help in promotion of exports

Some of the major constraints to exports are high freight rates, insufficient infrastructure and low quality standards

With the dismantling of qualitative restrictions under the WTO regime, a long term export strategy would need to be devised to improve our presence in world markets

Issues & Action Plan :

Issue 1

Food is as important as information technology. Food exports are not growing significantly. The WTO is going to start a review of agriculture in 2000

Action Plan 1

Similar to the Task Force on information technology, a National Task Force on Agri and Food Exports and Trade Strategy needs to be set up. This Task Force would

Develop a long term Agri and Food export plan

Consider developing a short term export plan focusing on tea and coffee, spices, fish and marine, rice and wheat, mango and grapes

Issue 2

Agricultural and processed food exports continue to be residual rather than a strategic part of the overall agriculture and processed food performance

India is viewed as an unpredictable and unreliable source of food and agro products despite having some world class production

Action Plan 2

Measures for ensuring supply to the international markets

increase production and quality of the food products specific to the export markets

Allow import of commodities as and when required to meet

the domestic demand

the requirements for inputs for export of high value-added products

Issue 3

Indian brands are yet to develop a good image in the international markets due to

poor efforts at international marketing

India’s image and identity as a low quality, unreliable producer of foods

poor awareness of Indian agri produce , except for certain products leading to

India not being the most preferred variety due to seed constraints

Action Plan 3

Develop market intelligence to build a country-product mix matrix

Aggressive marketing campaigns in the international markets to build India’s image as a leading producer of a variety of foods on the basis of

formulating a country-product matrix

proximity to cultural and consumer habits

Emphasize the superiority of Indian produce by creating the consumer confidence in the product quality

National Informatics Center should utilise the internet to host a website to promote India and its extensive agri produce featuring

the diversity of India in terms of its agro-climatic endowments and products produced

the progressive nature of Indian agri production

Issue 4

There is a multiplicity of export promotion agencies operated by the Central and the State Governments leading to

duplication of promotion efforts

different approaches in addressing markets and product-mixes

Action Plan 4

Constitute an Agro Food Development and Export Promotion Council at the apex level to co-ordinate the activities of various ministries (at the Center and the State) and their agencies, including commodity boards, research organisations and financial institutions

Issue 5

Indian products face consumer indifference due to perceived lack of quality

Action Plan 5

Generate quality consciousness in the agri production of India through

production and grading of agri produce ensuring quality output for processing

mobilise awareness of the quality parameters in the international markets by active participation in CODEX Committee meetings

encourage packaging industry to develop world class packaging materials

set up international inspection agencies like SGS at ports to certify shipments

Mandate to all food processing units to obtain GMP/ HACCP within three years. Extend benefits to these units as extended to ISO 9000 certified units in EXIM policy

Issue 6

Poor infrastructure for handling export of food and agri exports and floriculture

Poor post harvest handling and storage systems

Limited cold storage and handling facilities and insufficient cargo space for perishable commodities at the ports/ airports

Action Plan 6

Infrastructure Development

Setting up of handling facilities for "perishables" at the International Airports

Upgradation of facilities at the ports especially increasing the plug in facilities for the reefer containers at the ports

Railways to initiate steps for building dedicated facilities and routes for handling exports of perishables

Develop post harvest systems/ technologies for storage and handling of perishable commodities (see page)

Introduce latest cargo handling systems at the airports

Private sector participation for developing cargo handling and storage facilities at the ports

APEDA and MPEDA and other agencies have identified specific clusters for development of facilities. The upgradation to be done within one year and development within a three years time frame

Issue 7

Various types of clearances are required from different agencies at the Centre and State level to set up export-oriented projects

Action Plan 7

A single window system for all the clearances co-ordinated through the National Agro Food Development and Export Promotion Council

Issue 8

The development financial institutions do not have capability of appraising hi-tech export-oriented projects being set-up

Action Plan 8

The proposed apex Food Development Bank of India should have a special cell for funding the domestic and export development of food and agri processing industry

Issue 9

There are no suitable insurance schemes for hi-tech export-oriented projects most of which deal with export of perishables

Action Plan 9

Proposed Agricultural Insurance Corporation of India should device suitable insurance schemes for hi-tech export oriented projects for perishables in association with

NABARD, and

Banks and venture funds

Issue 10

In financing export-oriented hi-tech projects like high density farming, greenhouse floriculture, controlled environment livestock farming, bio-technology,tissue culture, embryo transfer technology,bio-pesticides and bio-fertilisers,etc. banks face considerable risks like :

credit risks

in the face of new technology, the risks are greater than average

technology risks

the absorption of new technology has a likely chance of failure as it has not been tested in actual situations

market risks

risk of rejection of the product by customer or by sovereign intervention

foreign exchange risks

sovereign risks

ECGC cover is available only in the case of insolvency/default of importers

Action Plan 10

Agricultural Insurance Corporation should devise schemes to provide adequate risk cover for banks

Issue 11

Although India has the largest livestock in the world, meat exports from India are effected by

livestock diseases

inadequate abattoir facilities

poor image of domestic slaughter houses

lack of a grading system in meat trade

lack of an effective centralised inspection system

lack of a pragmatic slaughter policy

Action Plan 11

The Ministry of Agriculture and the National Poultry Board should support effective utilisation of livestock resources and promote sustainable production for maintaining growth in exports by :

Establishing of disease free zones to realise high values for meat exports on a smaller scale establish meat export complexes containing modern abattoirs and meat processing facilities

Action Plan 11

Encouraging and certifying abattoirs exclusively meant for export

Introducing grading systems to meet the requirements of the Indian meat trade and export market requirements

Developing an infrastructure for inspection and strictly enforcing inspection procedures

Issue 12

India’s freight rates are around 50% to 100% higher as compared to other competing countries. This makes Indian exports uncompetitive

Action Plan 12

The freight subsidy needs to be enhanced to make the exports competitive. Currently a freight subsidy is 25% of IATA in Europe, CIS and Far East or Rs 10 per kg or one third of FOB value of export consignment whichever is lower. This has to be raised to 25% of actual air freight paid with no conditionalilies on average realisation etc. or Rs. 25 per kg whichever is lower

Issue 13

The progress towards identification and development of fruits and vegetables zones for exports has been limited and requires a greater thrust from export promotion agencies

Action Plan 13

APEDA should identify zones for different fruits and vegetables

Ministry of Agriculture, Horticulture Board and APEDA should develop exclusive production zones on the lines of ‘floriculture zones’ for important fruits and vegetables having export potential. These zones would have common infrastructure facilities like sorting, grading and cold store units

Issue 14

Although India is the fifth largest producer of eggs and exports of eggs has been very low due to

poor availability of refrigerated containers

lack of pre-cooling facilities

Action Plan 14