State the factors behind emergence of food processing sector as a high-growth and high-profit sector in India.

Food processing is the process of turning food material into food products through mechanical and chemical means. It has a great potential for value addition at every step.

High growth in food processing sector is due to:

  • Availability of raw material – India is a large producer of fruits and vegetables, cereals, oilseeds and pulses.
  • Domestic demand – India has an expanding middle class with high purchasing power.
  • Nuclear families where both parents work have increased demand for processed food.
  • Export potential – health conscious foreigners desire for healthy products.

Food processing is a high profit sector because of:

  • Significant value addition at every stage, e.g. wheat as a raw food product can be processed into wheat flour to increase its value, and this wheat is processed into biscuits or breads which further increases its value.
  • Farmers can get better prices for fruits and vegetables than cereals.
  • High earning foreigners and Indians are willing to pay premium prices for certain products, e.g. gluten-free food, organic food.
  • There is a great scope for eliminating middlemen by adopting the concept of contract farming, e.g. PepsiCo did contract farming with farmers to produce potatoes of high-quality which it processes into potato chips with huge value addition.

India targets doubling farmers’ income by the end of 2022. Food processing can help achieve this, and create enough jobs to end poverty (sustainable development goals).

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