ASSOCHAM favours FDI in food processing
Bhubaneswar: Favouring FDI in food processing, industry body ASSOCHAM Tuesday said it would substantially boost agro industries, especially in Odisha where investment in the sector is abysmally low at 4.5 percent of the total amount invested in the country.
If FDI in the food processing sector is allowed, flow of investment would jump manifold into Odisha which has the potential to get ten percent share of the total investment in this sector in the country, ASSOCHAM Secretary General D S Rawat told reporters.
Stating that Odisha accounts for only 4.5 percent of the total investment of about Rs nine lakh crore in food processing in the country, he said it would rise marginally to 6.6 percent of total investment which is likely to touch Rs 15 lakh crore in 2015.
Seeking concrete steps to raise investment in food processing sector in Odisha, Rawat said ASSOCHAM Cluster Development Foundation in collaboration with the state government has proposed to adopt two districts for setting up food and agri processing clusters.
This would be on the lines of its initiatives taken in West Bengal, Jammu and Kashmir and Bihar with full support from United Nations Industrial Development Organisation (UNIDO) and Central government, he said.
The UNIDO team would be in India in the first week of March and their association shall also be explored, he said.
"Odisha government must aggressively invest in upgrading the agri infrastructure and offer tax exemptions, lucrative incentives, schemes and subsidies to encourage investments from leading players in the food processing sector," he said, releasing a study titled 'Odisha: A Rising Investment Destination For Agro and Food Processing.'
"Growth bottlenecks like lack of cold storage, warehousing facilities, food testing labs and use of primitive technology together with inadequate knowledge amid farmers and entrepreneurs alike is the prime reason behind impending growth of Odisha’s food processing industry," said Rawat.
ASSOCHAM is holding a meet - "Food Processing Investment Summit: Market Development & Business Opportunities" in Cuttack tomorrow to explore possibilities in the state’s food processing sector.
"Though Odisha government has taken positive initiatives, much needs to be done to give a desired fillip to the food processing sector," said Rawat.
"There is huge investment potential in the sector considering easy availability of raw material, conducive business environment and the state being leading producer of rice, pulses, oilseeds, cotton, groundnut, coconut, jute, spices, potato and fruits and vegetables," he said.
Most of the land in the state is owned by small and marginal farmers practicing subsistence agriculture hardly having any access to markets. Besides, low level of capital formation and low availability of credit is significantly adding to farmers’ woes, according to the ASSOCHAM study.
The ASSOCHAM has recommended raising total area under irrigation, enhanced usage of bio-fertilizers, pesticides and post-harvest technologies by organising training programs on public-private partnership (PPP) model for existing and upcoming entrepreneurs in food processing industry.
"There is also a need to bring about a synergy between consumer, industry and the agri sector, apart from ensuring an easy, speedy and transparent communication between stakeholders, entrepreneurs and various government agencies," Rawat said besides adding "fresh domestic and international marketing linkages should also be developed."
Apart from export earnings, a well-developed food processing industry will lead to increase in farm gate prices, reduce wastages, ensure value addition, promote mixed cropping and generate employment opportunities, said the study.
It called for adoption of organic farming in Odisha to get more value propositional returns, generate jobs in areas of on-farm storing, processing, value addition, packaging and marketing, considering organic farms provide over 30 percent more jobs per hectare as against non-organic farms.
Agriculture and animal husbandry sector contributes about 23 percent of the net state domestic product (NSDP) and employs about 65 percent of the total work force in Orissa.
With about 3 million tonnes of milk production the state accounts for about two percent of the country’s total milk production of 124 million tonnes annually.
With a turnover of about Rs 650 crore, the state poultry industry accounts for just over a meagre one percent of India's poultry market which is currently estimated at about Rs 50,000 crore, ASSOCHAM said.