Rising population and unrestricted use of natural resources should motivate nations to build an efficient food value chain
What’s for dinner? The answer pertains to every living being. Food connects us all and is connected to our community, our traditions, our past and our future. Therefore, the challenge of feeding a population of 10 billion by the middle of the century is being considered on many fronts. It calls for efficient methods of production that are both economically viable and ecologically sustainable. Fortunately, technologies are emerging that reshape traditional approaches from farm to fork and with a lower environmental footprint. To promote processed food in large quantities, India, one of the largest producers of fruits and vegetables in the world, has designed a unique Produce-Linked Incentive Scheme (PLIS) that aims to encourage incremental sales.
progress so far
An amount of ₹10,900 crore has been earmarked for this scheme and till date, 60 applicants have been selected under Category 1 (https://bit.ly/3rMdqTc) which will be responsible for the sales done to firms and abroad. Promotes branding/marketing initiatives. Beneficiaries have been mandated to make a minimum investment while applying for the scheme. Considering the committed investment as a fixed proportion of their sales and execution of at least 75% of the projects, the sector is expected to invest at least ₹6,500 crore over the next two years.
A study in the United States concluded that a 1% increase in public infrastructure led to a 0.06% increase in food manufacturing output in the long run (https://bit.ly/3rOeE0l). This correlation is also good for India as more investments are being concentrated in states like Andhra Pradesh, Gujarat, Maharashtra, Tamil Nadu and Uttar Pradesh. According to the report of Good Governance Index 2020-21, these states have been ranked highest in the parameter ‘Public Infrastructure and Utilities’, with the highest improvement in ‘connectivity to rural settlements’ (https://bit.ly/3nZ98Xz) . For the export market, it is now established that sales promotion is positively related to increased sales volume, but inversely related to profitability. In order to bridge this gap, among the 13 key areas declared under PLIS, ‘Food Processing PLIS’ defines a dedicated Category 3 to support branding and marketing activities in overseas markets. This ensures that the share of India’s value-added products in the export basket is improved, and it can take advantage of its unique geographical proximity to the untapped markets of Europe, Middle East/West Asia, Africa, Oceania and Japan.
easy access to credit
As a result of the novel coronavirus pandemic, a large number of people have been working from home over the past two years. This has spurred demand for products from the ready-to-eat market, which saw a nearly 170% increase in sales volume between March-June 2020, as stated by NetScribe (global data and insights firm) . The pandemic has increased consumer awareness about functional foods, which is expected to provide a launchpad for health-oriented start-ups and micro-food processing units. However, access to finance of Micro, Small and Medium Enterprises (MSMEs) is a perennial problem in the country, predominant due to lack of proper credit history mechanism for MSMEs.
Smart financing options such as peer-to-peer (P2P) lending hold potential for micro-food processors, as in the United Kingdom government-owned British Business Bank (MUDRA Bank of India, or Micro Units Development and Refinance Agency Bank). similar) can be seen. ) which has helped more than 1,18,000 small businesses gain access to more than US$17.88 billion (https://bit.ly/3Aziz4T). Access to working capital has been addressed in principle by Trade Receivables Discounting System (TReDS), a platform to facilitate financing/discounting of trade receivables of MSMEs through multiple financiers.
However, making the platform compliant requires considerable scaling-up and simultaneous enforcement along with stringent measures for corporates. Integration of the TReDS platform with the e-invoicing portal of the Goods and Services Tax Network will make TReDS more attractive and bring relief to the financiers.
a sustainable food ecosystem
With increasing population, changing food habits and unrestricted use of natural resources, nations must come together and draw up a road map for a common efficient food value chain. New options are being discovered that have the immense potential to replace the staples of rice and wheat in the form of nutritious-cereals, plant-based proteins, fermented foods, health bars and even fresh fortified foods for pets. chances are. By welcoming new brands to the category, PLIS aims to create an enabling ecosystem for innovation in both food products and processes. After the Great Depression of 1929, skirt hemlines were indexed to predict financial status. Nearly a century later, brightness and night light data from satellites indicate the extent of economic progress. No wonder, 50 years later, the progress of nations will be benchmarked for their ability to sustainably feed their populations.
Harsh Vardhan, an IIM-Ahmedabad graduate, is a thought leader for Invest India (under the Department for Promotion of Industry and Internal Trade, Ministry of Commerce and Industry, Government of India).
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