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MPPSC

DAILY
CLASS NOTES
Geography

Lecture – 40
Food Processing Industry - 02
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Food Processing Industry - 02

Locational factors Influencing Food Processing Industries :-

The factors that influence the location of 'Food Processing Industries are:
❖ Market :-
➢ This is vital to management analysis of the Agri-food industry, because it
provides the market information to assess an agri-food plant's viability.
➢ Since agri-food plants enter existing markets.
➢ it is essential that firms know the market conditions.
➢ Thus, firms analyze the market structure, consumer behavior and the basis of
competition within where the plant is located.
➢ Proximity to markets, distribution centres and availability/cost of truck and rail
services seem to be more critical to the location of small plants than to the
location of larger ones.
❖ Infrastructure :-
➢ The basic infra structural aspects such as water, electricity, existing food
processing facilities etc.
➢ The firms also assess the transport infrastructure, including roads, availability and
cost of truck and rail services and storage terminals.
➢ In addition, the firm should also consider the social infrastructure including
housing, schools and health and recreational facilities because these components
may affect the plant's ability to recruit the necessary personnel.
❖ Agricultural raw material :-
➢ For a food processing Industry, a well-organized procurement system is
necessary to supply enough raw material with acceptable quality at the
appropriate time and at a reasonable cost.
➢ Example: Availability of raw agricultural supply is most critical for milk and
seafood processing plants.
❖ Environmental Factors :-
➢ In this category, the existence of the ability to handle water and solid waste was
the most frequently cited factor as being very important for the location
decisions.
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➢ This is due to the environmental regulations and permits in place.

❖ Climatic factors :-
➢ The climate in North-western India is suitable for preserving food-based

products for a longer duration due to its cooler climates.

➢ Other parts of the country, including peninsular and eastern India, are more

humid and are not suitable for longevity.

Economic factors :

❖ Availability of raw product :

➢ For an industry to succeed, the raw materials should be easily available at a

lower cost.

➢ The North-western part is suitable in this regard due to its primarily farm-

based economy.

❖ Readily available market :

➢ Large markets are available nearby for selling the manufactured products in this

region due to higher population concentration.

➢ This reduces the cost of transportation as well as creating profits for the owners

in a short duration.

❖ Cheap labour :

➢ Cheaper labour force reduces operating costs of such industries quite drastically.

➢ As there is easy availability of such human resources, this region has a

concentration of agro-industries.

Geographic factors :-

❖ Connectivity: The region is marked with better connectivity to all major places

nearby. The transportation can be conducted through both road and rail and hence

is easy for marketing products as well as movement of raw materials.

Upstream and downstream requirements :

❖ When the manufacturing production process is pictured like a river, Upstream refers
to the material inputs needed for production, while downstream is the opposite end,

where products get produced and distributed.

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Point of reference Upstream Downstream

Farmer Traders of seeds, fertilizers, Middleman @ Mandi

pesticides and agro-machinery. Food company (If he has a
contract.)
Households (Directly selling to
consumers.)

Food processing Farmers Distributors

company Mandi agents Wholesalers
Suppliers of food preservatives, Retailers
edible-colors, plastic aluminium Final customers
packaging, etc.

Kirana Shop Wholesaler Aam-aadmi (Common man)

Flipkart.com Book publishers Online buyers

Mobile/electronics/computer
companies
Suppliers of packaging boxes,
bubble wrap, etc.

Upstream Production Elements :

❖ Using the metaphor of a river, upstream production refers to all the activities needed
to gather the materials required to create a product.
❖ The upstream stage of the production process involves searching for and extracting
raw materials.
Downstream Production Elements :
❖ This process involves processing the materials collected during the upstream stage
into a finished product.
❖ The downstream process often includes elements such as distribution, wholesaling and
retailing, all of which are involved in ensuring timely delivery to clients.
❖ Customer service is also part of the downstream process because it is the final bridge
between the product and the end user.
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Food Processing and Supply Chain Management:

❖ Supply chain management (SCM) is the management of the flow of goods. It includes
the movement and storage of raw materials, inventory and finished goods from
point of origin to point of consumption.
❖ Thus, Supply Chain Management is the management of the upstream and
downstream, with value-addition at each stage :

Steps Taken by the Government (MoFPI) to Boost Food Processing Sector in India :-
❖ PM Kisan SAMPADA Yojana (PMKSY): It has been envisaged as a comprehensive
package that will result in the creation of modern infrastructure with efficient supply
chain management from farm gate to retail outlet.
❖ PM Formalization of Micro food processing Enterprises (PMFME) Scheme: It aims to
enhance existing individual micro-enterprises in the unorganized segment of the food
processing industry.
❖ Production Linked Incentive Scheme for Food Processing Industry (PLISFPI): It aims
to boost domestic manufacturing and increase exports while supporting food
manufacturing entities with stipulated sales.
➢ Make an investment for the expansion of processing capacity. For example, 100%
FDI is permitted in the food processing sector.
❖ The One District One Product (ODOP) scheme :- It was launched under the PMFME
to provide the framework for value chain development and alignment of support
infrastructure. ODOP approved for 713 districts in 35 States/UTs with 137 unique
products.
❖ Operation Greens :- It was launched to boost Farmer Producer Organizations (FPOs),
agri-logistics, processing facilities, and professional management, focusing initially on
Tomato, Onion, and Potato (TOP) value chains from 2018. As part of the "Atma
Nirbhar Bharat Package", the scheme was extended from TOP crops to all fruits and
vegetables
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❖ The Government of India has relaxed foreign direct investment (FDI) norms for the
sector, allowing up to 100 percent FDI in food product e-commerce via the
automatic route.
❖ The Ministry of Food Processing Industries announced a scheme for Human Resource
Development (HRD) in the food processing sector. The HRD scheme is being
implemented through State Governments under the National Mission on Food
Processing. The scheme has the following four components:
➢ Creation of infrastructure facilities for degree/diploma courses in food processing
sector
➢ Entrepreneurship Development Programme (EDP)
➢ Food Processing Training Centres (FPTC)
➢ Training at recognised institutions at State/National level
PM Kisan Sampada Yojana :
❖ This scheme is aimed at promoting entrepreneurs in setting up food processing units
closer to agricultural areas.
❖ Development of cold storage facilities, specialised packaging units, warehousing
facilities, etc., and other preservation facilities are eligible for grants under the
scheme.
Creation of Mega Food Parks :
❖ A mega food park is an integrated facility that provides storage and processing.
❖ Most food parks have the following services: tetra-packaging, food testing
laboratories, drying chambers for spices and agricultural produce, cold storage,
warehousing, and packaging and printing facilities.
❖ The Mega Food Park Scheme is based on the "Cluster" approach and envisions a well-
defined Agri/horticultural-processing zone containing state-of-the-art processing
facilities with support infrastructure and a well-established supply chain.
❖ Objective and Approach of Mega food Park Scheme :- Primary objective of the MFPS
is to provide adequate /excellent infrastructure facilities for food processing along the
value chain from the farm to the market.
❖ Main feature of the scheme is a cluster-based approach with a "Hub and Spoke
Model".
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➢ CPC-Central Processing Centre

➢ PPC - Primary Processing Centre
➢ CC-Collection Center
General Risks Associated with Food Processing :-
❖ Processing of food can decrease its nutritional density.
❖ For example, heat destroys vitamin C. Therefore, canned fruits possess less vitamin C
than their fresh alternatives.
❖ Using some food additives represents another safety concern.
❖ For example, using sugar as an additive endangers diabetics.
❖ Increased consumption of Sodium results in increased risk for heart disease.
❖ Food processing is typically a mechanical process that utilizes large mixing, grinding,
chopping and emulsifying equipment in the production process.
❖ These processes introduce a number of contamination risks. Such contaminants are
leftover material from a previous operation, animal or human bodily fluids,
microorganisms, and non-metallic and metallic fragments.
❖ Further processing of these contaminants will result in downstream equipment failure
and the risk of ingestion by the consumer.
➢ Example : A mixing bowl or grinder is used over time, metal parts in contact
with food will tend to fail and fracture.
Challenges and Road Ahead for the Food Processing Sector in India:
❖ Lack of cutting-edge infrastructure: Many food processing businesses operate in the
small and medium enterprises (SMEs) sector, which often lacks the resources needed
to upgrade their facilities and machinery to the latest technology.
❖ The industry is also plagued by:
➢ Inefficient supply chains,
➢ Inadequate storage and transport facilities, and
➢ A lack of access to credit and financing.
➢ Impact of these issues : These issues make it difficult for SMEs to enter the
market and compete with larger, more established companies.
Challenges faced by the Sector :-
❖ More than 40% of the sector is unorganized in nature.
❖ Low agricultural marketable surplus due to fragmented land holdings, seasonality of
the produce, lack of cold chain and significant post-harvest losses, inadequate
implementation of the APMC Act, etc.
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❖ Supply chain issues :- Long & fragmented supply chain,

multiplicity of intermediaries, high logistics costs and
inability to compete in the global market.
❖ Restricted access to finance: Due to high risk associated with
lack of control over supply chain by farmers and lack of
dedicated Venture Capital Fund.
❖ Innovation deficit :- Lack of R&D, inadequate technology
transfer from research lab to the industry, inability of small
players to invest, inadequate expenditure by government and
private sector etc.
❖ Inability to leverage brand value :- Deficit of platforms to brand Indian products
globally, cases of Phyto-sanitary measures imposed by importing countries
constraining market access.
Constraints and Challenges to Food Processing Industries:
❖ The Challenges faced by the Food Processing Industries in general include
➢ There exists gaps in supply chain infrastructure which means inadequate primary
processing, storage and distribution facilities.
➢ Insufficient connection between production and processing.
➢ Seasonality of operations and low capacity utilisations.
➢ Institutional gaps in the supply chain, for instance, there is dependence on APMC
markets.
➢ Lack of focus on quality and safety standards, and
➢ Not having enough product development and innovation.
Other constraints faced by the Indian food processing sector are as follows:
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Way Forward :-
❖ Considering the Policy shortcomings of the Government, The MoFPI should announce
the National Food Processing Policy at the earliest to fill the policy vacuum.
❖ The ever-increasing demand for processed food products domestically and in
international markets, as well as supportive government policies, are providing the
impetus for the sector.
❖ Therefore, the sector can become an even more important component of India's GDP
and economic growth if all stakeholders—from the government and private players—
come together and realise this goal.
❖ Given the economic potential of the sector and its capability to address food security,
the following measures could be taken:
➢ The government needs to regulate its trade liberalization policy so that it leaves
enough space for its domestic food industry to grow.
➢ Efforts need to be made to ensure that the scheme benefits reach the intended
beneficiaries—small & marginal farmers—and also to increase the collaboration
of Industries with farmers.
➢ Also, the Government needs to ensure fairness by producers so that farmers get
a better realization of the money earned across the value chain. A policy
intervention or regulation in this regard is the need of the hour.
➢ Going forward, the adoption of food safety and quality assurance mechanisms
such as Total Quality Management (TQM), including ISO 9000, ISO 22000,
Hazard Analysis and Critical Control Points (HACCP), Good Manufacturing
Practices (GMP) and Good Hygienic Practices (GHP) by the food processing
industry offers several benefits.
➢ This would enable adherence to stringent quality and hygiene norms and thereby
protect consumer health, prepare the industry to face global competition,
enhance product acceptance by overseas buyers, and keep the industry
technologically abreast of international best practices.
Natural Vegetation :-
Climate Vs Weather :-
❖ Climate: Describes the average conditions expected at a specific place over a long
period of time. Aggregating weather statistics over periods of 30 years. Its study is
called Climatology.
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❖ Weather: Describes the atmospheric conditions at a specific place at a specific point in

time. Weather generally refers to day-to-day temperature and precipitation activity.
Real-time measurements. Its study is called Meteorology.
❖ Factors Affecting Climate :
➢ Latitude
➢ Altitude
➢ Continentality
➢ Ocean currents
➢ Local winds
➢ Relief & topography
➢ Natural vegetation and soil
➢ Slope, Shelter & aspect

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