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Food processing and related industries in India- scope and significance, location, upstream and downstream requirements, supply chain management-> See important sectors in food processing-> See important states-> See challenges, and reasons why those challenges exist Scope and SignificanceMore than 35,000 registered unitsContributes about 10% to the agricultural GDP (which is quite low as compared to many developed economies) As per ASI 2010 survey, food processing provides the most employment out of any industrial stream (employs about 17 lakh people)If set up near agriculture-heavy states/ areas, they help bring employment, exposure to industry, provide ready market for agricultural produce, and limit rural-urban migrationHelp reduce food inflation by cutting out middlemen (at least inflation pass through into manufactured food)Indirectly also helps in crop diversification; if there aren’t food processing industries close by, it is in the interest of farmers to grow something that can endure distance and time, and hence cereals are preferred over horticultural productsPotentialResearch shows that food habits are changing, and tastes are moving away from cereals towards horticultural products and processed food (because of urbanization, demographic change etc.); household consumption is expected to double by 2020India has abundant raw material (both crops and livestock) and manpower for this industry; can make up investment shortages by inviting FDIGovernment has already taken the step of deregulating many food-processing sectors that were earlier reserved for SMEs Challenges:India currently processes only about 6% of its total vegetables and fruits, as against over 25% in China and USAIndia’s labour laws, history of regulation and reservation for SMEs, high indirect taxes, bad supply chain, and lack of infrastructure have led to many food processing industries being stuck in the medium-size phase, thereby not exploiting economies of scaleHigh packaging costs and post-harvest lossesLack of organized retail reduces the variety of products that can be commercially viable (cuts out many kinds of products that require cold storage)Lack of credible food testing facilities like FDA in USALack of R&D and skilled manpowerTransportation problems: Indian trucks cover only about a 3rd of distances trucks cover in a day; railway freight charges are some of the most expensive in the world, and the speeds, some of the slowest; ports are in shambles, with high turnaround times, LocationMajority of the food processing units are located in coastal areas: AP, Maharashtra, Karnataka, Kerala, Gujarat, Punjab, West Bengal etc. each have more than a thousand registered units. Upstream and Downstream RequirementsSupply Chain ManagementRaw materials like grains, raw meat, fish etc are collected by different sources. These sources may do preliminary processing of these to make components of a food product before passing over them to the main manufacturer through many middlemen. The manufacturer does the final processing of these components to make the food product. This completes only the first stage of supply management.Now the finished product has to be delivered to the consumer. Here also there will be a number of middlemen and stages. The manufacturer normally hands over the food product to a wholesale dealer. The wholesaler pass the product to a retailer from where the consumer buys the processed food item for his personal use.Thus, Supply Chain Management is the management of upstream and downstream value added flow of materials from suppliers→ company→ retailer→ final consumers. ................
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