Agro & Food Processing July 2017 by Advance Info Media & Events

GST DIARY: How traders are avoiding tax post GST in India

Vol 12 Issue 09 July 2017 100/-

ITC

the imminent Policy of self-reliance food mogul in food production? Indiaâ&#x20AC;&#x2122;s Agrarian Import Bill reached $21.8 billion INDIAN BASMATI RICE: TRENDS & OUTLOOK

Agro & Food Processing July 2017

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Agro & Food Processing July 2017

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Agro & Food Processing July 2017

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Agro & Food Processing July 2017

CONTENTS 9

Computational fluid dynamics Enhancing the food processing industry

ACE Technologies manufactures Industrial purpose conveyor 44 systems Jain Farms will take up mango planting to TN and Karnataka Secratry focused on tech importance to boost export ‘Maharashtra framing agri-processing policy to bring investment

16 INDIAN BASMATI RICE: TRENDS & OUTLOOK

PM launched Agro-Marine processing scheme 'SAMPADA'

Food deficit J & K indicates progress in farm output level SBI aims 10 lakh farmers via its all-India meet to boost agri loans SEA demanded to raise import duty on edible oil

24 Policy of self-reliance in food production? India’s Agrarian Import Bill reached $21.8 billion

Safal to open two F&V outlets in Bhubaneswar Food regulator issues draft regulations for organic food products Food regulator promotes fortified food

FSSAI favours extension of ban on milk imports from China

31 GST DIARY- How traders are avoiding tax post GST in India

Food regulator turns down NADA’s request to frame food supplement standards

FSSAI to address concerns upraised by the industry on new standards on health supplements Fortified milk needs to address health issues

53 Amul has to go off air with frozen dessert advt: Bombay HC

36 ITC: The imminent food mogul

Maharashtra has tremendous potential in dairy sector Quality Logo will bring process improvement in the entire value chain: Radha Mohan Energy efficiency in the food industry

Govt. shall provide financial assistance to food processing units in Goa

CHARCOAL

Are We Ready for the Newest Superfood On the Block?

4 mega food parks to be operational and 300 new cold chain proposals received

Agro & Food Processing July 2017

EDITORIAL

Editor Manzar Aftab Naqvi Group Editor Firoz H. Naqvi firoz@advanceinfomedia.com Consulting Editor Basma Hussain Graphic Designer Naved H. Kazmi naved@advanceinfomedia.com Associate Editor Glenes Bothelo Glenes@advanceinfomedia.com Advertisement Executive Anjali Mane anjali@advanceinfomedia.com Circulation Seema Hayat Shaikh seema@advanceinfomedia.com Delhi Sayyed Shahnawaz +91-8375034558 Gujarat Brijesh Mathuria +91-99245466999 Genreal Manager Gyanendra Trivedi Marketing & Circulation Office 121,1st floor, Rassaz Multiplex, Station Road, Mira Road (E), Dist. Thane- 401107 Telefax : +91-22-28555069, Tell.: +91-22-28115068 Mob.: +91-9867992299 E-mail: info@agronfoodprocessing.com sub@advanceinfomedia.com Vol 12 Issue 09 July 2017 Annual Subscription Rs.950/By Normal Post Add Rs. 400/-For Courier Charges Add Rs. 50/- For Outstation Charges Overseas $80 By Air Mail Email:sub@advanveinfomedia.com Single Copy Cost Rs. 100/Printed, Published & Owned By Manzar Aftab Naqvi RNI No. MAHENG /2005/15987 Postal Regd. No. THW /50/2017-2019 Regd. Office Advance Info Media & Event 103,AmarJyot Apartments, Pooja Nagar, Mira Road (E) Dist Thane-401107(Mumbai) Printed At Rolleract Press Services A-83,Ground Floor, Naraina Industrial Area Phase-1, New Delhi -110028

The views expressed in this issue are those of the contributors and are not necessarily those of the magazine. Though every care has been taken to ensure the accuracy and authenticity of the infomation,"Oil & Food Journal" is however not responsible for damages caused by misinterpretation of information expressed and implied within the pages of this issue. All disputes are to be referred to Mumbai Jurisdiction.

he Centre proposed to double the income of farmers by 2022, there by setting a total of 17 new mega food parks under the “Make in India” programme. Rs 6,000 crore has been sanctioned under the Kisan SAMPADA (Scheme for Agro Marine Processing and Development of Agro processing clusters ) which will provide grants and subsidies to entrepreneurs willing to set up agro-based food industries. India is the world’s largest milk producer and occupied the second and third spot in the production of cereals, fruits, vegetables and marine production respectively, but unfortunately only 10 per cent of the domestic production is processed and provides value addition. In contrast even small countries like Thailand and Malaysia provide more value addition to their produce than India. Value addition is most important aspect of Indian agro-food processing industry. Then why has the government ignored it and rather food being subjected to one or two rates – which is standard practice in most developed markets – the Indian system will see food products covered by zero, 5%, 12%, 18% and 28% tax rates. For instance, many preserved vegetables are in the 18% bracket, and mixed condiments and seasonings attract 28%,. Meanwhile, the rate for processed packed food products such as instant mixes for idlis, dhoklas, soups, chilli sauce, garlic ginger mixes and more is 18%. The current combined rate of their sales taxes is usually 10% to 11% "and so the price of all these will go up substantially. A similar sales tax hike can be expected for pickles, papad, squashes, jam, mango chutney and button mushrooms, will attract 18% GST, compared to current combined sales tax rates of 10%-11%. The government is making a strategic mistake by mandating lower rates for basic fresh foods, exempting products such as fresh tomatoes, apples, bananas and mango, while charging higher rates for processed foods and this far from helping poorer consumers will move to harm them. It was highly expected that government would have encouraged food processing as it adds value, which help farmers, instead of taxing these products at a higher bracket of 18%. The GDP growth in agriculture is grimly low and if food processing grows, agriculture GDP would also grow. Higher taxing will hamper the food processing industry, leading to a lowering of agriculture growth. Coca-Cola along with its partners will contribute over USD 1.7 billion in next five years to the Indian agriculture ecosystem. The amount will be for the entire supply chain from "grove to glass through a concept called 'Fruit Circular Economy. About $800 million of this contribution would be towards procurement of processed fruit pulp and fruit concentrate for the Coca-Cola Company's ever increasing portfolio of juice and juice drinks and carbonated drinks with juice products in India. Coke is expanding its portfolio beyond carbonated drinks and will introduce frozen desserts in India. It will also put fruit chunks in Maaza and Minute Maid to make the drinks healthier. Some said it is an assault on people's eating habits, while some termed the move as an effort to impose the RSS agenda over the country. Amid all the controversy, criticism and pressure, the Central government is going to make major alterations to the controversial rules under the Prevention of Cruelty to Animals Act, which bans animal markets from selling cattle for slaughter. The changes could clear the confusion on several issues including the possible exclusion of buffalo from the ban. Though the BJP clan says that the ban on sale of cattle for slaughter is being politicised and the notification has been misrepresented, misinterpreted and misunderstood, and that they had no intention to directly or indirectly hurt the slaughtering business, or harm farmers or even influence the food habits of the people. If so how come did it then wobble the cattle and livestock market drastically? More than 90 per cent of the buffaloes traded in the country are bought by slaughter houses from cattle markets, for their meat and for use in the leather industry. Another slip-up of the government is the late assigning of ministries and department for approval of FDI after dissolution of The Foreign Investment Promotion Board (FIPB) on 1st February. FIBP was dissolved to accelerate approvals for foreign direct investment (FDI) proposals, but, it seems to have had the exact reverse effect for food retail. As Amazon, Big Basket and Grofers, collectively planning to invest $1 billion in food-only retail in the country, had filed applications to do so in January. Last but not least, an undue salute to all the farmers who have lost their lives fighting for their rights, for their families, for their children and for feeding us. I think the government has to go beyond the loan waiver and provide new and better policies for small and landless farmers. India needs to develop its insight for our producers and make them secure and prospered.

Agro & Food Processing July 2017

FLUID DYNAMICS

Computational fluid dynamics Enhancing the food processing industry

ithin modern food processing, a phenomenal amount of time can be spent testing and refining products before aspects such as taste are even considered. Computational fluid dynamics (CFD) is not a term that many associate with food, being more at home in engineering settings, but could help processing companies to significantly reduce their testing and development time. CFD has been around since the early 20th century, familiar to many as a tool for analyzing the way that air flows around cars and aeroplanes .Today, the

tool has enhanced and is used in a variety of industry sectors that utilize fluids, employing numerical solutions in order to optimise the flow possibilities inside a processing component. Values such as velocity, pressure, temperature and turbulence are obtained from the multiple simulations. In fluid applications, these values are then used to visualise the fluid flow fields at different locations inside apparatus like heat exchangers, pipes and mixing tanks. Computational Fluid Dynamics (CFD) CFD is a simulation tool used to predict

what will happen, quantitatively when fluids flow, often with the complication of simultaneous flow of heat, mass transfer, phase change (melting, freezing, boiling), chemical reaction (combustion, rusting), mechanical movement of (pistons, fans etc.), stresses in and displacement of immersed or surrounding solids. CFD uses a computer to solve the relevant science-based mathematical equation, using information about the circumstances in question. Performing a CFD Analysis It is done in three stages: pre-processing, processing and post processing. In pre-

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FLUID DYNAMICS

of interest. • It provides a great deal of credibility in food industry and has been integrated in main stream of design and analysis. • CFD results can provide the necessary confidence which other simulating tools are unable to provide. • It helps in modifying the design of various equipment’s like spray drier. Here CFD is used to analyze the performance of industrial spray drier so as to make necessary changes to drier when possible. • CFD offers low cost than the physical testing methods which help in understanding essential engineering data for design which can be expensive. processing step all the tasks that take place before the numerical solution process. This includes problem thinking, meshing and generation of a computational model. Processing involves using a computer to solve mathematical equations of fluid flow. This is a very intensive process and usually it requires the computer to solve many thousands of equations. In each case, the equations are integrated and boundary conditions are applied to it. In post-processing step, this program is used to make evaluation of the data generated by CFD analysis. When the model has been solved, the results can be analyzed both numerically and graphically. CFD Applications in Various Areas CFD uses powerful computers and applied mathematics to model fluid flow situations. The state of success is how well the results of numerical simulation agree with experiment in cases where careful laboratory experiments can be established, and how well the simulations can predict highly complex phenomena that cannot be isolated in the laboratory. As a result, CFD has become an integral part of the engineering design and analysis environment of many companies because of its ability to predict the performance of new designs or processes before they are manufactured or implemented. Several areas of CFD applications includes architecture, chemical and process engineering, electronics and computer, HVAC (heat, ventilation &cooling), petroleum, train design, turbo machinery etc. Its physiological applications includes cardiovascular flow (Heart, major vessels), flows in lungs and breathing passages.

However, it is only in recent years that CFD has been applied in the food processing area. Since CFD technique can be of great benefit to the food processing industry, fast development has taken place in the past few years. CFD as a tool of research for enhancing the design process and understanding of the basic physical nature of fluid dynamics can provide benefits to the food processing industry in many areas such as drying, sterilization, mixing, refrigeration and other application areas. Advantages of using CFD • It provides a detailed understanding of flow distribution weight losses, mass and heat transfer &particulate separation etc. • It makes it possible to evaluate geometric changes with much less time and cost than would be involved in laboratory testing. • It is able to reduce scale-up problems because the models are based on fundamental physics and are scale independent. • It is particularly useful in simulating conditions where it is not possible to take detailed measurements such as high temperature or dangerous environment in an oven.

CFD Applications in Food Processing CFD applications in food industry may assist in a better understanding of the complex physical mechanisms. CFD is applicable in food processing areas such as: Clean-room design, Refrigerated transport, Static mixers, and Pipe flow. Since CFD technique can be of great benefit to the food processing industry, fast development has taken place in the past few years. CFD, as a tool of research for enhancing the design process and understanding of the basic physical nature of fluid dynamics can provide benefits to the food processing industry in many areas, such as drying, sterilization, mixing, refrigeration and other application areas. Improving the Cleaning of Food Processing Tanks Tanks are used in food production plants for many purposes: storage of raw materials and end products, buffer for intermediate products, fermentation, mixing, heating and cooling. In severe cases, poor cleaning can cause biofilm formation on equipment surfaces, which can cause corrosion and health problems, therefore tanks must be clean at the starting point.

• It provides flexibility to change design parameters without changing actual system changes thereby allowing engineers to try more alternative designs which would be feasible.

The challenge is to optimize the design of cleaning systems with respect to their efficiency and economy and to optimize parameters in CIP - cleaning procedures, improve hygienic design by simulating flows in tanks, spray balls and pipes with CFD, find practical detection methods to study cleanability and also for routine quality control.

• It allows the analyst to examine large number of locations in particular region

However performing a numerical simulation of the flow through the junction

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11 a powerful tool to aid the prediction of drying process therefore can be used to predict the air flow and velocity during drying. Determination of pressure profiles and air velocities by CFD showed that the main cause of the variations in drying rates and moisture contents was the lack of spatial homogeneity of air velocities within the drier. Although the flow pattern and air velocity in the drier can be predicted using CFD modeling, further study on how to control the drying process and to reduce the energy cost is still a research topic for CFD modeling. Meanwhile, more attention should be paid on the assumptions such as spatial homogeneity because of such assumptions could lead to inaccuracy in prediction.

yields the velocity distribution from which the shear stresses along the walls are deduced. Although the quantification of the cleaning performance related to local shear stress values is difficult, especially due to the statistical nature of the test results and the modeling of the turbulent boundary layer along the walls in the simulation. Nevertheless, after a preliminary quantification of the results of the numerical simulations CFD can be used to compare results for geometrically different junctions and hence enables the engineer to improve the design at an early stage, without the necessary tests: these tests are limited to the final, optimized design only. Most Importantly CFD can be used assess the cleanability of a T-junction. Electrical conductivity measurements of a salt solution of known concentration before and after the T-junction were cleaned using deionized water. This comparison gives an acceptable qualitative agreement with finite volume-based calculations that involve both steady-state and transient operations. This approach is prerequisite for the development of models that will ultimately include bacterial growth and deactivation kinetics under processing conditions. Applying CFD in Optimization of Hygiene CFD is a useful tool for optimization of hygienic design of closed process equipment. A combination of wall shear stress, fluid exchange and turbulence conditions can predict areas which are not properly cleaned. Also surface topography, material properties, the specific microbiological flora and other

component of soil have an influence on the cleaning efficiency. The most successful ways of prevention microbiological contamination is to ensure that proper cleaning is performed. Results from CFD simulations yield information about wall shear stresses in the tank and the flow rates in different parts of the system. The results from the experiments studying a simple case revealed similar trends from traditional cultivations and CFD. This has given a support to the hypothesis that a combination of knowledge in fluid dynamics and microbiology gives an excellent base for hygienic of integrated tank and CIP cleaning systems. Drying Drying is a common food manufacturing process. The drying rate is a strong function of air flow or air velocity. Therefore, it is of great importance to know the air flow and velocity in the drying chamber, thus leading to know the areas of adequate air velocities for proper drying. However, air flow and air velocity are difficult to measure during operation because several sensors are needed to be placed at various directions of air flow and locations. Cereals and oilseeds are dried after harvest to the moisture content that allows microbial stability during storage. Vegetables are blanched before drying to avoid rapid darkening, and drying is not only carried out to inhibit microbial growth, but also to avoid development of browning in storage. Since there are some difficulties in modeling the complex phenomena, especially the gas turbulence, CFD is

Spray Drying CFD has also been used to investigate the performance and design of spray dryers in the food industry. Spray drying is used to reduce volume and allow storage and easy shipping of a variety of food products, including milk powder, instant coffee and a variety of high-value nutraceutical products. Crucial importance in this process is gaining an understanding of the drying and residence time of droplets/particles in the dryer and prevention of fouling of the dryer walls (an issue which can take many hours of lost production to remedy). These performance factors are determined by liquid feed location and spray angle which impact particle trajectories, and hence potential of fouling. The operator is able to modify parameters such as vane angle, spray nozzle locations and orientation based on simulation studies in order to achieve improved dryer performance. Moreover, CFD can also be used for investigating different chamber design on drying behaviour of food materials as well as scale-up studies, air-particle interactions, different turbulence models, reference frames, reaction engineering model used for spray-drying applications along with the particle histories and different spray chamber configurations. This also highlights the recent developments in this research area such as drying kinetics model, droplet interactions, unsteady state simulations and integration of population balance model.

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FLUID DYNAMICS

shear rate) viscosities. Simulation can assist with the selection of mixer design, agitation rate and baffling requirements and allows engineers to increase product quality and manufacturing throughput by reducing blending times. A good example is the stirring of yogurt which is a thixotropic fluid. In the example shown below, the viscosity is plotted on a plane through the tank after 2 and 11 revolutions of the stirrer and shows the thinning of the fluid over time.

Pasteurization Pasteurization is a vital unit operation which is used to inactivate the spoilage organisms and enzymes present in the milk. Scientists conducted CFD modeling to determine the temperature distribution pattern inside canned milk during thermal processing. In this study, a CFD model was developed for the pasteurization process of canned milk at 74Â°C and 85Â°C and validated with the experimental measurements. Moreover, the effect of can rotation (50 and 100 rpm) on processing time and pasteurization value was investigated. This study predicted rotation of can with 5 rpm was more effective than stationary positioned can during pasteurization. Sterilization Sterilization is an important technique for food storage and preservation. CFD can be used to study both the temperature distribution and flow pattern of food in the process of sterilization so as to optimize the quality of food products. Thermal processing is the most significant technique of sterilization which results in microbial inactivation, but sometimes results in quality loss and flavor development. Excessive heating will affect food quality and its nutritional properties. With the application of CFD, there has been number of studies to optimize the thermal sterilization of foods. These studies had led to substantial improvement on the optimal control of the process and the retention of the nutritional and sensory quality of food. CFD code was used for the purpose to simulate the transient temperature, velocity profiles, and shape of the slowest heating zone in sterilization of carrot soup in pouches. However, all of these investigations about CFD application in sterilization are on the thermal sterilization in the limited area of

liquid foods. There are still many challenges in the area of sterilization with application of CFD for instance, Ultra-Violet, Visible and Infrared light surface sterilization, plasma/corona sterilization, electrons and X-rays sterilization, nascent oxygen/ ozone sterilization of fruits and vegetables, pressure sterilization of fresh fruit juices and cooked ham. The application of CFD in these sterilization fields of food is still to be developed in future. Mixing Mixing processes are ubiquitous in the food and beverage industries, with a variety of objectives including blending, dissolution of solids, maintaining suspension during temporary storage or to promote a rheological change in the fluid. The products often start with low viscosities but become thicker over time and exhibit either non-newtonian or thixotropic (varying with time and

Agro & Food Processing July 2017

Mixing applications involve the substances of gas, liquid and solid. However, mixing is a complicated process as regards to the multiphase turbulence during mixing and the design of a mixer. CFD is a powerful tool for the modelling of mixing processes. It provides a natural method to link food process and fluid flow information, the phenomena in an agitated vessel can be predicted . All types of mixers do some work on the material being mixed and produce some increase in temperature. It is often desirable to minimize this temperature rise. However mixers are chosen to do special kinds of work on heavy viscous materials while they are being mixed. These working mixers are designed with precise geometries to maximize the efficiency and minimize the energy requirements to achieve the mixing working operation. During mixing, a common method of enhancing the process is to use some kind of stirrer or paddle. CFD codes have been applied

FLUID DYNAMICS

in optimizing the mixing process to minimize energy input and to shorten processing time. Baking It is a term commonly used for the production of cereal based products such as bread, biscuits etc. and generally applied to the production of fermented bread. Baking is the process of the conversion of some relatively unpalatable ingredients (starch, gluten etc.) into aerated, open cell structure bread which involves the simultaneous heat and mass transfer where heat is transferred into the food from the hot surfaces and air in the oven and moisture is transferred from the food to air that surrounds it and then removed from the oven. In a typical indirect-heating continuous baking oven, the dough/ bread effectively experiences four major heating zones. The temperature profile in the four zones is critical because temperature in each zone is the dominating factor on the baking mechanisms including gelatinization, enzymatic reactions etc. therefore the final bread quality is affected. Refrigeration The process can slow down bacterial growth and preserve food. Therefore, researchers have recently applied CFD in the modeling of heat and mass transfer in foods during refrigeration (chilling and freezing). Factors affecting accuracy of CFD modeling includes: temperature, different models, thermocouple positions etc. CFD designs can examine whole range of modifications before manufacturing, designing at a minimal cost and in a short time]. Refrigerated foods require strict control over temperature, design of equipment or stores for refrigerated foods are very important for the utilization of CFD, designers can examine the whole range of modifications before manufacturing and designing at minimal cost and in as short time . CFD being the powerful simulation tool to analyze and solve the problems, is one filiations of the fluid dynamics which uses computer to evaluate momentum, heat, mass and other control equations of fluid in the fixed geometry space for getting the useful message in the given conditions. Whether you are baking biscuits or making ice cream, the process needs a highly controlled thermal environment which produces uniform conditions and

uses as little energy as possible. A small reduction in fan power can result in a massive saving on the electricity bill when a process is running 24 hours a day, 365 days per year. Computational modelling allows the positioning of heating/cooling units, air flow distribution and product location to be optimised to maintain product quality whilst reducing energy requirements. Airflow velocity in an ice cream cooling tunnel Heat Exchangers A heat exchanger is a device built for efficient heat transfer from one medium to another. In order to predict and control food quality during heating process, CFD has been used to simulate and study the flow distribution and temperature distribution of fluid. The trend towards aseptic processing, combine with the aim of minimizing cooked flavors in heat processed products is leading heat exchangers to be constantly redesigned and improved. In this case, CFD can be used to optimize such redesign of heat exchangers. Traditionally, CFD analysis has been applied to simulate the flow of a fluid around obstacles and through hollow areas in order to control temperatures, reduce resistance to flow and/or optimize phenomena such as lift. Crystallization It is one of the oldest unit operation in the chemical and food industry but the design and operation of crystallization processes still pose many problems. However,

until recently, there have been few tools capable of providing the required capabilities. This is because modeling of crystallization processes poses a number of challenges. The key challenge is representing the inherent physical and chemical complexity of crystallization phenomena mathematically and validating the resulting mathematical model against experimental data. CFD helps in modelling of crystallization process and design of crystallizer. Rolling Processes Some production processes require rolling operations, such as when making biscuits, pastry or chewing gum. The key objective is to adjust the rolling pressure to give the desired thickness whilst accounting for the non-linear, time-depend properties of the material. Wrigleys use ANSYS software in the production of their chewing gum that require the modelling of a complex elastomer. Combing complex material properties and detailed mechanical models to produce chewing gum (Image courtesy Wrigley, a subsidiary of Mars Inc.) Packaging Production of bottles and other containers requires a balancing act to use the minimum material possible but produce a container with sufficient strength to survive transport and everyday handling. A good example is blow moulding used in bottle production where the entire process can be simulated and optimised, allowing engineers to identify thin/weak spots and ultimately produce a bottle that requires minimal material while maintaining overall bottle strength.

Agro & Food Processing July 2017

FLUID DYNAMICS

Another interesting packaging example is the pouring of liquid from a flexible carton. We have all had bad experiences when pouring milk or juice from a carton so it is good to know that advanced modelling can help solve the problem! Tetra Pak used advanced CFD modelling to study the turbulent, free surface flow, coupled with the motion of the container to understand the gulping process and design better cartons.

Application Problems Food designers are increasingly using the software tools to produce new food products. Therefore one has to face several problems while using CFD. This requires the use of powerful CFD packages, high speed computers, wellversed CFD experts, accurate algorithm for the equations of motion. These problems hinder the widespread use of CFD.

Liquid pouring from a flexible carton showing air backflow that causing the gulping behaviour.

Moreover Conventional CFD packages include features which can predict only â&#x20AC;&#x2DC;mixture-averageâ&#x20AC;&#x2122; properties of food but unable to predict physico-chemical properties.

Nutraceuticals There is a greater awareness than ever before of the benefits of combining a healthy diet with the benefits of a variety of natural products that enhance overall health and have shown potential to combat cancer. We have all been told to eat vegetables of as many different colours as possible, as these provide our system with a wide range of anti-oxidants and other active compounds.

Therefore, the biggest problem in CFD is probably not the mesh generation, nor the necessary computer power or the CFD solvers, but to find the people who really can do the full job. It is expected that considerable demand for specialists to apply and develop CFD methods

There is now a growing industry to extract these beneficial chemicals from a wide variety of vegetable and fruit products, including residues that were previously discarded or underutilized by industry. Production technologies involve a wide range of processes with one example being the use of bubble column bioreactors. CFD provides ways to improve the design of such reactors by optimizing the hydrodynamics, sparger design and assessing the impact of different feed injection points.

Agro & Food Processing July 2017

throughout the food industry. Conclusions CFD can be used as a tool for design of food processing equipment. Its applications include the cleaning of storage tanks, crystallization, conventional cyclones, drying, sterilization, crystallization, mixing and refrigeration, fermentation, baking etc. But its effectiveness and practicability depend on several factors like powerful CFD packages, high speed computers, well-versed CFD experts etc. However, the simulation results should be rechecked by experiments because CFD use many approximate models as well as few assumptions. There are still some obstacles such as inability in accurate simulation of large 3-D problems on an affordable computer, particularly in largescale sophisticated plants but its trend of widespread applications in the food processing industry is expected to rise in the 21st century.

Agro & Food Processing July 2017

BASMATI ON WHEELS

INDIAN BASMATI RICE: TRENDS & OUTLOOK

ice is one of the most crucial food crops in the world and a staple diet for nearly half the global population. Over 90% of the global rice output and consumption is cantered in Asia, wherein the world’s largest rice producers, China and India, are also the world’s largest rice consumers. High domestic consumption and restrictive trade policies of several countries for rice have restricted the international trade of rice to only 6-7% of the production. Food security objectives and the need to provide income support to domestic producers are the main reasons cited by

countries to restrict rice imports. Among the several varieties of rice, Basmati is considered the most superior in terms of product characteristics and therefore, the most premium. Rice is the most important food crop in India contributing to more than 40 percent of total food grain production and cultivated/ consumed across the country. Rice is predominantly a rainfed crop planted in the kharif season after the onset southwest monsoon rains during June through August. Basmati rice constitutes a small portion of the total rice produced in India. By volume, the share of Basmati in total

Agro & Food Processing July 2017

rice production is around 6% (as of FY 2016), but by value, Basmati exports account for 60% (as of FY 2016) of India’s total rice exports and its exports have increased at a compounded annual growth rate (CAGR) of 13% from Rs. 10,890 cr in FY 2010 to Rs. 22,718 cr in FY 2016. The proportion of Basmati export in India’s total exports was at around 1.3% in FY2016 and it remains an important constituent of the Indian export basket. “Basmati” is long grain aromatic rice grown for many centuries in the specific

BASMATI ON WHEELS

geographical area, at the Himalayan foot hills of Indian sub-continent, blessed with characteristics extra- long slender grains that elongate at least twice of their original size with a characteristics soft and fluffy texture upon cooking, delicious taste, superior aroma and distinct flavour, Basmati rice is unique among other aromatic long grain rice varieties. Agro- climatic conditions of the specific geographical area as well as method of harvesting, processing and aging attribute these characteristic features to Basmati rice. Owning to its unique characteristics the “scented Pearl” lends a touch of class

that can transform even the most ordinary meal into a gourmet’s delight. Varieties The main varieties of Basmati rice as notified under the Seeds Act, 1966 are Basmati 386, Basmati 217, Ranbir Basmati, Karnal Local/ Taraori Basmati, Basmati 370, Type-3 (Dehradooni Basmati), Pusa Basmati-1, Pusa Basmati 1121, Punjab Basmati-1, Haryana Basmati- 1, Kasturi and Mahi Sugandha. Pusa Basmati 1121 developed by the Indian Agricultural Research Institute (IARI) and released for commercial

cultivation in kharif season of 2003 is the most widely used variety as it requires less water, matures early and yields 19–20 quintals of paddy per acre as compared to 9–10 quintals for traditional tall basmati. Areas of Cultivation The areas of Basmati Rice production in India are in the states of J & K, Himachal Pradesh, Punjab, Haryana, Delhi, Uttarakhand and western Uttar Pradesh. Besides it is also cultivated in Punjab/ Sindh regions of Pakistan. India is the leading exporter of the basmati rice to the global market. The country has

Agro & Food Processing July 2017

BASMATI ON WHEELS

18 exported 4.05 MMT of Basmati Rice to the world for the worth of Rs. 22,718 cr during FY16. This compares with 6.36 MMT of non -basmati rice exported in FY16. Saudi Arabia, Iran, United Arab Emirates, Iraq and Kuwait are the major export destinations for Basmati rice. PRODUCTION Total annual production of Basmati is about 10 mt. Saudi Arabia, Iran, Iraq, UAE, Kuwait remain prominent markets of 3-4 mt of Basmati rice annually. Basmati Pusa 1121 and 1509 varieties released, respectively in 2003 and 2013, by IARI in parboiled form have proved to be a boon for the farmers/millers and buyers in Iran/Saudi Arabia as it is 40% cheaper than traditional basmati with grain length of 20 mm after cooking. At present, it trades at $1150 fob versus $900 fob last year. Thai fragrant rice competition is subdued with Pusa 1121. Surtaxed capacities involving optical and electronic sorting machines have been upgraded by rice millers for uniformity in color/quality. Prominent rice exporters are also targeting the US and the EU— though they keep raising issues of Minimum Residue Levels of fungicide, which adversely affects volume and velocity of exports. Production Decline Basmati paddy prices witnessed significant decline in FY 2015 and FY2016 thus becoming a less attractive option for farmers, hence the decline in cultivation in this current year. The total area under cultivation is expected to have fallen from around 2.1million hectares in FY2016 to 1.6 million hectares in the FY2017. Resulting in a production decline from around 9.8 million tonnes to around 8.0 million tonnes during the same period.

Strong demand in the Middle East While basmati rice is consumed across the globe, West Asian countries account for 75 per cent of Indian basmati rice exports in 2015-16. Within West Asia, Iran and Saudi Arabia are the two largest buyers, together accounting for over 40 per cent of basmati rice exports from India. UAE and Iraq stepped up their purchase of basmati rice (owing to absence of Iran) resulting in exports to those two countries increasing by 103% and 38% CAGR over FY14-FY16. Overall exports increased by 3.8% CAGR during the same period to 4.05 MMT.

Benin is supportive; Bangladesh requires more than one million tonnes of rice desperately and trade is focused on this demand. Indian non-Basmati rice prices are lower than the competition from Thailand, Vietnam, Pakistan.

Exports In 2014-15, basmati/ non-basmati rice exports were $7.8 billion, this has slipped to $5.8 billion in 2016-17, but still, India remains world’s largest exporter of rice at 10 mt. Poor demand in Africa, especially in Nigeria, of non-basmati rice, and slowdown of basmati shipments to Iran and Saudi Arabia could be possible reasons. Iran shipments declined over 50% from 1.44 million tonnes in 2013-14 to 0.7 million tonnes in 2016-17.

rice export is negligible to South-east Asia and China. Rice (Basmati+NonBasmati) export of 75 million tonnes (mt) in a decade between 2007-17 with forex earnings of Rs 2,76,000 crores—which as per current $/rupee parity equals $42.5 billion is one of the most notable features of India’s trade thrust. This would be even more in dollar terms if lower rupee-dollar is factored for previous years. Thailand stands at number one with export of 90 mt rice in the same period while India at number two and Vietnam with 62 mt at number three.

The outlook for non-basmati rice for 2017-18 appears positive as strong demand from Nigeria via neighbouring

The success of rice export business is attributed to minimal interference by the government, diversity of paddy varieties, superior capability for parboiled rice, logistical advantages for Africa, botched-up past policies of the Thai government in paddy pricing and deficient performance of Pakistan. Indian

India would have surpassed Thai’s highest figure—but for the three- year ban (from 2008 to 2011), imposed by the then government on export of non-basmati rice. India suffered “export loss” of atleast 16-17 mt of rice during prohibition period, while there was no scarcity of cereal in that triennium. India has never imported rice on government account for last 25 years or so, and thus has a record of self-sufficiency. All rice exports are from private stocks—thus keeping food security fully insured through FCI and its agencies. If data for the last five years is analysed, then India shipped out @10.9 mt

Agro & Food Processing July 2017

BASMATI ON WHEELS

20 each year—54.5 mt versus 47.5 mt of Thailand—because no ad-hoc tweaking in export policy was done by the government that is how it should be. Exports require unrestricted access to markets and any ban or change in policies entail handing over clients to competition. Thailand, due to its government’s irrational paddy pricing policy of 2011, outpriced itself from African/Asian markets. Its rice quality suffers due to processing from old-damaged paddy.

Iran may resume purchases of Basmati rice Although Iran has emerged as one of the largest importers of basmati rice in recent years, it had imposed a ban on basmati rice imports from India in 201415, citing its own healthy rice crop and large basmati inventory. The ban by Iran on Basmati rice imports resulted in huge stock of Basmati rice with manufacturers leading to a decline in realizations from rice.

In 2017-18 too, India is likely to maintain annual shipments of 11-12 mt of rice in a world trade of 42 mt. This sustained success should be highlighted in all international fora to build India’s brand image as a quality and quantity exporter of rice.

Exports to Iran had touched a high of 1.4 MMT in 201314 before the country imposed a ban on imports of basmati rice. Iran lifted the ban in November 2015 but later reimposed it in July 2016 to support local farmers in their harvest season. This ban was reportedly lifted in Jan 2017. In FY16, basmati rice exports from India to Iran almost halved to $571 million from $1.1 billion in the previous financial year. In the first half of the current fiscal year, basmati rice exports from India to Iran amounted to $356 million.

The government’s programme to “Bring the Green Revolution to Eastern India (BGREI)” through improved technologies launched in 2010 has realised significant productivity gains in Bihar, Chhattisgarh, Jharkhand, eastern Uttar Pradesh, West Bengal, and Odisha. India’s annual production is about 110 mt of milled rice; opening stocks of 19 mt; total availability is 129 mt versus local consumption of 100mt + exports of 11mt, thereby leaving surplus of 18 mt as of now. India lacks presence in South-east Asian market of Indonesia, Philippines and China where Thailand/Vietnam dominate because of logistics and historic continuity. China, too, is turned regular importer of 4 mt annually where our presence is negligible.

Consequently, the sowing of basmati across the key growing areas of Punjab, Haryana, western Uttar Pradesh and Uttarakhand had seen a sharp fall of 25% to 1.57 million hectares in the last kharif season, from close to 2 million hectares reported in 2015. With lower supplies hitting the markets, realisation from the exports of aromatic and longgrain rice rose to $800 a tonne in Dec-16 from $750 a tonne prevailing in the last couple of months. Besides Iran, the biggest exports destination for India’s basmati rice, is likely to resume imports of rice shortly. A commerce ministry official said that exports realisation could reach $900 a tonne in the next couple of months because of lesser supplies because of lower production and firming up global demands.

Agro & Food Processing July 2017

Share of basmati exports to Iran had risen from negligible levels in FY 08 to ~38.3% in FY 14 post which it declined to 17.2% in FY 16. The ban imposed by the country on basmati imports is likely to be lifted resulting in higher exports to Iran. Opening up of Chinese markets for basmati China has agreed to import basmati rice from 14 companies in India (including KRBL, LT Foods and Kohinoor Foods).

Opening up of China as an export destination is a positive for the Indian basmati rice industry providing a fillip to exporters, who are just recovering from the muted global demand and a correction in prices in the recent past. According to ICRA, India and China together contribute around 40 per cent of the global rice production, which is estimated at around 740 million tonne of paddy. However, both the countries are also the largest consumers of rice, thereby restricting their participation in the international trade. While India is a net exporter of rice, China is a net importer. Chinese rice is typically short in length and nonaromatic. However, with the increasing income levels and flourishing global trade, the population in China has also developed a preference for other varieties of rice. China has emerged as the largest importer of rice in recent years. ICRA has a positive outlook on Volumes and Realisation over FY 17 and FY 18 As per ICRA, lower production volume and stable global demand is expected to push up realisations of basmati rice in FY 2017 and FY 2018, despite short-term impact of demonetisation. Basmati rice industry is expecting a rebound in H2 FY 2017 and FY 2018 with demand driven improvement in realisation and low

BASMATI ON WHEELS

inventory prices. The export demand, which has remained subdued for last two years, is expected to witness a pickup in the coming months when a majority of export orders are received. This is expected to push up the realisations in H2 FY 2017 and FY 2018. Most of the large exporters, who are holding relatively lower priced inventory, are expected to benefit from this. While paddy prices have inched up in the current procurement season, this would be comfortably covered by growth in realisations. In the past two years, the basmati rice industry has been under financial stress on account of excess paddy supply and weak international demand, leading to a sharp decline in realisations. The average export realisations declined from Rs 77,988/MT in FY 2014 to Rs 56,149/MT in FY 2016. However, there has been some improvement in demand in Q1 FY 2017 also reflected by the increase in export realisations to Rs 59,247/MT. For the remaining period, the export demand is expected 19 x 15 cmto improve further, with Iran

also expected to join the order booking. Further, steady domestic demand growth would add to the overall improvement in realisations for the industry. Paddy production is expected to be lower in FY 2017 by 15-20 per cent. Thus, paddy prices have opened higher by around 20 per cent in the current procurement

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season starting October 2016 and are expected to remain firm. Nevertheless, this is expected to be outweighed by the growth in realisations in H2 FY 2017 and FY2018. ICRA expects the export volumes in FY 2017 to be around 3.99 million MT (almost similar to the volumes in FY 2016). However, the improvement in realisations is expected to push the

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Agro & Food Processing July 2017

BASMATI ON WHEELS

22 values of exports to around Rs 23,000 cr in FY 2017 as against Rs 22,718 cr in FY2016. For FY 2018, ICRA estimates the volume and value of exports to be around 4.03 million MT and Rs 25,800 cr respectively. GST impact: 5% rate to squeeze margins of basmati rice exporters Earlier, Basmati rice was subject to VAT in some states and nil duty in others. The profits of branded basmati rice manufacturers and exporters are likely

shipments are likely to rise in the coming years.

aided the growth of basmati consumption in the domestic market.

"Imposition of GST is likely to put branded players in a somewhat disadvantageous position, compared to the unbranded rice segment. More likely, the branded players will witness some erosion of profitability, as they'd look to absorb the GST impact and maintain pricing parity with the unbranded segment,"said Deepak Jotwani, assistant vice-president at ratings agency ICRA.

There has also been a shift from unbranded to branded basmati. The domestic market has now become as strong as the export market for most basmati companies in the organised sector. Concerns Falling realizations for basmati rice exports Over the past 2 and a half years, basmati prices have been on a down trend. Average realization from basmati rice exports have declined by 32.3% from ~Rs 77,982/MT in FY14 to Rs 52,789 in FY17 (upto Oct). This is the lowest levels in over 8 years. However, the lower realizations led to farmers incurring losses in the previous year and acreage for basmati is expected to be lower in this year which should support prices.

to be squeezed due to the five per cent Goods and Services Tax (GST) effective July 1. Earlier, the aromatic rice was either subject to value added tax or was tax-free, from state to state. At present, the impact of a five per cent GST would be nullified due to a sharp increase in prices abroad. Official data shows India's per-unit average realisation from basmati rice exports at $995 a tonne for April-May, compared to $790 a tonne for the corresponding period last year. "Prices have risen 25 per cent over the past few months on the building of a pipeline inventory in Iran, the largest importer, comprising over a quarter of India's annual basmati rice export, and the Middle East. There is fear in the market that Iran might stop issuing licenses for basmati rice import. Hence, importers there are building inventory to avoid any shortage,"said Gurnam Arora, joint managing director, Kohinoor Foods.

Another issue if that the GST applies to only brands registered under the Trade Mark Act. Those with established but non-registered brands are likely to benefit and many in the sector have petitioned the Union Finance Ministry to resolve this. The basmati rice industry was primarily export-oriented. However, over recent years, the domestic market has expanded significantly. There have been concerted efforts by large companies to establish their brands in the domestic market. Coupled with the increased penetration of modern retail stores, and increasing purchasing power of consumers, this has

Despite reduced Iranian demand, India recorded four million tonnes of basmati rice shipment during 2016-17, almost similar to the previous year. With China opening its door by registering 14 Indian companies for basmati rice export, these

Agro & Food Processing July 2017

Climatic conditions leading to lower production Cultivation of basmati depends on monsoon rainfall and suitable weather. Hence, deficient rains and harsh climatic conditions could affect its cultivation and output. Import controls and export regulations Although most countries importing basmati have a fairly open policy, restrictions due to quality or sociopolitical reasons could impact the growth of Indian players. Any tariff or non-tariff barriers imposed by any of the countries could also hurt the future growth of the. Similarly, any export curbs by the Indian government could impact the growth.

Agro & Food Processing July 2017

SELF-RELIANCE ?

Policy of self-reliance in food production? Indiaâ&#x20AC;&#x2122;s Agrarian Import Bill reached

$21.8 billion

India is swiftly changing its policy of self-reliance in food production. Despite claiming a bumper production in recent years, the government has encouraged import of agricultural produces. More importantly, it has allowed import of cereals like wheat, maize and non-basmati rice. The volume of import of these grains increased by 110 times between 2014 and 2017. Farmers who produce them are at the centre of the current crisis because they are the worst hit by the fall in the prices caused by the import.

griculture Minister Radha Mohan Singh exuded confidence that India will become self-sufficient in pulses and oilseeds production in the coming years with the government taking steps to boost yields through use of better quality seeds and technologies. On the

other hand country imports over 5 million tonnes of pulses and about 14.5 million tonnes of vegetable oils (comprising edible and non-edible oils) every year to meet domestic demand. The unprecedented situation is result of numerous policy decisions that have made

Agro & Food Processing July 2017

the domestic market less remunerative for farmers. Traders now find it cheaper to import from Australia than to procure local produces. The change in policies has caused a huge spike in Indiaâ&#x20AC;&#x2122;s agro food import bill. The spending on the import of cereals, which include wheat, maize

SELF-RELIANCE ?

and non-basmati rice, increased from Rs 134 crore in 2014-15 to Rs 9,009 crore in 2016-17 – a rise of 6,623%. India also imported Rs 5,897 crore worth of fruit and vegetables in 2016-17 while the figure in 2014-15 was Rs 5,414 crore. On Government is spending on imports while

on the other hand, it has put restrictions on exports. In 2014-15, India’s agrarian exports were to the tune of Rs 1.31 lakh crore but fell to Rs 1.08 lakh crore in 2015-16. What’s worse is that the government is trying to hide this shift in policy. In May

2016, the Union Ministry of Agriculture issued the advance estimates for grain production for 2015-16, forecasting a wheat production of 94 million tonnes. The prediction was surprising because it was up 8.6% from the previous year’s despite deficit monsoon and drought-like

Agro & Food Processing July 2017

SELF-RELIANCE ?

in 1964, the annual production of wheat in India was just 10 million tonnes. By 1970, it had doubled. In 2012-13, India exported 6.5 million tonnes of wheat. In 201314, wheat production was a record 95.8 million tonnes.

conditions in large parts of the country in 2014-15. The hollowness of the government’s prediction became clear when, suspecting a fall in production, it procured only 23 million tonnes of wheat for the public distribution system (PDS) in 2016-17 (against 28 million tonnes procured for 2015-16) and encouraged import of wheat. It first reduced the import duty on wheat from 25% to 10% in September 2016 and then completely removed it in December. If there was a bumper crop, what was the need to import? Moreover, the government had also said that there was a rise of about 8% in cultivation of wheat in the 2016-17 rabi season. So there should not have been any need to remove the import duty. The truth is that despite the government’s claim of a bumper crop in 2015-16, the market had got wind of the impending wheat shortage. This was the reason behind the 25% rise in prices of wheat flour in the market between April and December 2016. This prompted the government to encourage the import of wheat. According to the Food Corporation of India, the volume of wheat in government storage facilities reached its lowest in the last decade in 2016-17. On January 1, the figure stood at 1.38 million tonnes against 2.4 million tonnes in 2015-16. This was alarming, because 1.38 million tonnes is the minimum buffer stock limit set by the government. This also means that India’s wheat import this year could likely be the highest in the past decade. In the current season (2016-17), more than 5.75 million tonnes of wheat has been imported from Australia, Ukraine and France (see ‘No more self-reliant’).

Though India today is much better placed in terms of food security than it was before the Green Revolution, the import-promoting policies will have a huge impact on the food price. The government uses import as a mechanism to check food inflation. But this hurts farmers, particularly at a time when domestic production is very high. Ajmer Singh Lakhowala, head of the Punjab unit of Bharatiya Kisan Union, says that the decision to abolish import duty on wheat was taken when the farmers were struggling due to the effects of demonetisation in November last year and hoping for some relief measures. “The import of cheap wheat will bring the prices down. It appears the government wants the farmers to quit farming,” he says sarcastically. Several agricultural bodies have demanded that the government impose a 40% duty on wheat import. R.S. Rana, a farm sector expert based in Sonepat, Haryana, says that the import of wheat would demotivate farmers and cause a fall in production in the next season. “Wheat mills in south India are finding the cost of imported wheat 1015% cheaper than the wheat they get from north India,” he adds. If the duty-free import continues, the price of wheat in the market could go even lower than the minimum support price (MSP). Though government has increased the MSP of wheat from Rs

Import and food inflation It is ironical that all this is happening while India celebrates 50 years of Green Revolution. The Green Revolution helped India transform from a “ship to mouth” economy to one of the world’s leading exporters of wheat and rice. Consider this:

Agro & Food Processing July 2017

1,525 a tonne to Rs 1,625 in October 2016 and of pulses from Rs 50,500 per tonne to Rs 54,500 on June 20, 2017, the gains for the farmer were minuscule because the duty-free import was allowed till March 2017. On December 20, 2016, farm scientist and architect of India’s Green Revolution M.S. Swaminathan, tweeted, “Our progress in wheat production in the past was hampered by cheap wheat imported through the PL480 programme of the USA.” From exporter of wheat of about 14 million tonnes (approx $4 billion in 201213 to 2014-15), India has turned into a structural importer of $1.5 billion of grain in the last three years. Spike in wheat import in 2016-17 over the previous year is 840% by value. In 2014-15 and 2015-16, market estimates of production each year varied 84-87 million tonnes (though Government claimed 93-95 mt). FCI stocks depleted to 8 mt (buffer norm is 7.5mt) on April 1, 2017, and imports ballooned to about 4 mt in 2016-17, thus validating the market’s view. Wheat procurement pf 30 mt this year vs targets of 33 mt implies that OMSS supply to flour millers will be restricted. This necessitates private imports of 5-6 mt in 2017-18. Already importers are looking for cargos from September 2017 onwards from Australia and Black sea at landed values of $240 and $205 respectively which will be cheaper than domestic wheat after 10% duty paid. The government has rightly stayed away from importing wheat directly for FCI and let privates fill the gap. This prudence has kept world wheat prices range bound and non-inflationary, because traders

Agro & Food Processing July 2017

SELF-RELIANCE ?

government reduced the import duty on crude and refined palm oil by 5%. As a result, peanuts and soybean in the country started being sold below MSP. With such policies, how can the farmer be expected to increase production? While the import of edible oil has seen a threefold rise in the past decade, oilseed production has gone down by 10%.

import in economical lots with the spread of time, instead of bulk tendering by the public-sector undertakings (PSUs), which often results in inflated import values. The point is that India was able to witness the Green Revolution because the government made sure the farmers felt secure pursuing there livelihood. Apart from providing them with better seeds, fertilisers and techniques, the government also assured them of sale at a reasonable price. Decisions, such as the removal of the import duty erode that trust. It is notable that soon after it came to power, the National Democratic Alliance government, started putting pressure on state governments to avoid buying wheat at above MSP. This reduced the procurement and thus the wheat shortage in government godowns. In a way, importing wheat is like outsourcing agriculture. Swaminathan has already termed import of grains as import of unemployment. part from being linked to the livelihood of farmers, the issue is also linked to India’s food security and sovereignty. In 2008-09, agrarian imports were just 2.09 per cent (Rs 29,000 crore) of India’s total imports. They rose to 4.43% (Rs 1.21 lakh crore) by 2014-15 and 5.63% (Rs 1.4 lakh crore) by 201516. This money should have ideally gone to the farmers, who are struggling with poverty.

India. Still in 2012-14, India imported 0.77 million tonnes of sugar. As a result, in 2015-16, sugar prices reached their lowest in the past six years. Sugar mills ran out of money and started defaulting on payments they had to make to sugarcane farmers. Their debt to farmers ran to the tune of Rs 22,000 crore. In January, the government even discussed removing the import duty on sugar. Losing gains of the Yellow Revolution India’s import-promoting policies have had another side-effect. They have made the country a major importer of food oil and pulses. In 1993-94, only 3% of oil consumed in India was imported. The figure today is nearly 70% and India spends around Rs 70,000 crore annually on its import. The domestic market is flooded with cheap imported palm oil and soybean oil. In 2015-16, India had a bumper crop of oilseeds. Right before the harvest the

What unregulated import can do to agriculture can be better understood with the example of sugar. Abinash Verma, Director General, Indian Sugar Mills Association (ISMA), says that the sugar produced in India in the past six years exceeded the sugar consumed in

Agro & Food Processing July 2017

As far as pulses are concerned, the government has gone a step further and started outsourcing their production. When the price of pulses was skyhigh last year, India signed MoUs with Mozambique to get pulses cultivated in that country. In the next five years, India will import about 0.3 million tonnes of pulses from Mozambique. The government is also trying to find ways to import pulses from countries like Brazil and Myanmar. Just like edible oil, the government encouraged import of pulses to check food inflation. India today imports 25% of its pulses, spending around Rs 20,000 crore annually. The import of pulses has also risen threefold in the last decade. Despite having a bumper yield in the last kharif season, the government imported 5.9 million tons of pulses worth over Rs 25,600 crore in 2016-17. As a result, when pulses reached the markets, the prices had fallen and they were sold below MSP. T. Haque, former head of the Commission for Agricultural Costs and Prices, says that India’s agrarian policies over the years have lacked coherence. Despite domestic production, we inexplicably keep promoting import. To get our agriculture out of this vicious cycle, first

Agro & Food Processing July 2017

SELF-RELIANCE ?

30 we need to set our foreign trade policies in order, he says. Import of pulses jumped from $2.3 billion in 2013-14 to $4 billion—an increase of 74%. Out of 5.4 million tonnes (mt) of pulses shipped to India, 50% or about 2.7 mt are peas/yellow peas from Canada/ USA. Kharif acreage of pulses is down by 33% which points to lower output, compelling higher imports of Tur, Urad Moong. News of possible decline in production will make imports costlier. The government has been fronting state agencies for import through bulk tendering. PSUs tenders escalate world prices, thereby pushing up values for private import as well. When state agencies dispose pulses in the domestic market at subsidised prices that is at a loss it disturbs the parity of private imports because they cannot discount their costs. This may discourage import, thereby creating more scarcity in the country. Govt. Initiatives Addressing the 89th foundation day of the Indian Council of Agricultural Research (ICAR), Agriculture minister Singh said that the government is not only focusing on increasing production but taking steps to make agriculture “income-centric” as part of its target to double farmers’

income by 2022. The minister asked ICAR scientists to work in a mission mode to achieve this target as well as the overall development of agriculture and allied sectors, which contribute 18 per cent to GDP. He emphasised on skill development in agri sector to boost crop yield and farm income. Singh said the green revolution helped India in becoming selfsufficient in wheat and rice, but the country is still importing pulses and oilseeds to meet domestic demand and spending huge amount of foreign currency. “We achieved a record production of pulses in the 2016-17 crop year. The sowing area is also higher this year. We are progressing towards self-sufficiency. In next 2-3 years, we will become self-sufficient in pulses,” he said. On oilseeds, he said the efforts are being made through more than 600 Krishi Vigyan Kendras (KVKs) across the country to boost productivity and production. The country’s pulses production increased to record 22.40 million tonnes in the 2016-17 crop year (July-June) against

16.35 million tonnes in the previous year. Oilseeds output rose by 29 per cent to 32.52 million tonnes last year. The minister lauded efforts of farmers and scientists for the record 274 million tonnes of foodgrain output in 2016-17. He said this has been possible due to availability of technologies, quality seeds and related services to farmers. Highlighting the initiatives taken in last three years, the minister said the government has already provided soil health card to 9 crore out of 12 crore farmers. Soil health card coverage has reached 100 per cent in 16 states. Except Uttar Pradesh and Bihar, rest of the states will be covered in the next two months, he said.

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Agro & Food Processing July 2017

GST DIARY

How traders are avoiding tax post GST in India

run Jaitley said that GST is a simple tax and several misunderstandings are being spread about this new taxation system. but the truth is that the industry is really under edge and seeking ways to avoid tax. Along with the industry the customer who is second in the tax chain to be burdened are unhappy and unwilling to shell out extra dimes for things that are priced higher under this very simple tax regime.

But Retailers and traders are increasingly coming up with “smart ways” to keep customers, unwilling to pay higher “integrated taxes” under the new Goods and Services Tax (GST) regime, Retailers are applying “innovative ways” to ensure that their products “remain at lower rates under the GST regime”. Providing separate bills to customers on purchases is one of the “innovative ways”, but there are others.

Under the GST regime, branded rice is taxed at 5%, while unbranded rice is exempt from tax, and, this fact is being taken advantage of. The scope of avoiding tax or paying lower rates became possible because of the government’s decision to keep multiple rates under GST. While a few products are exempt from tax, others are charged at 0%, 5%, 12%, 18%, 28%, plus cess. Also, the tax is divided between the state and the Central governments,

Agro & Food Processing July 2017

GST DIARY

15%. Under registered trademark, the products are subjected to quality check by government officials and about 10% additional costs on processing to maintain quality is added.

Until now many retailers sold food products under trademarked brands but they prefer to sell it without a brand name, thanks to the Goods and Services Tax (GST) that levies 5% tax on branded produce. With Goods and Services Tax (GST) regime, millers deregistered their brands which attracted 5 percent tax in the new indirect tax system. This was done so that their products would come under the zero tax brackets as the profit margin in dal business is very low, therefore, it will be difficult for them to sustain in the market. While the pros and cons of the new tax regime are still being debated, traders of two major crops in north Karnataka — toor dal and Sona Masuri rice — are struggling to cope. The sale of the crops under registered trademarks attract 5% tax, making them costlier compared to unregistered brands, which are not taxed. In order to avoid GST, toor dal traders in Kalaburagi, and Sona Masuri rice traders in Raichur, Sindhanur, Gangavathi, Karatagi, and other towns and cities along the Tungabhadra paddy belt are now either giving up their trademarks or stopping sale under registered trademarks. For instance, in Kalaburagi, one of the major red-gram growing districts in the country, there are over 250 dal mills of which only six had registered their unique brands under the Trade Marks Act. Now, all six have deregistered their brands to avoid GST. Even 5% tax makes a huge difference in the highly competitive market. Dal mills with unregistered trademarks can sell the product at much lower prices as their brands do not attract GST. Also when a food product is sold under registered trademark there are additional costs incurred in maintaining quality of product for selling them and hence the actual difference would be more than

The Indian Basmati rice companies are in the same shoes, as the profitability of the organised basmati rice companies is likely to be negatively impacted as the same will be subject to 5% Goods and Services Tax now. Earlier basmati rice was subject to value-added-tax (VAT) or was tax free in different states. However under GST, basmati rice has been included in the category of branded cereals registered in the Register of Trade Marks that attract a levy of 5% GST. This is likely to put the branded players in a disadvantageous position compared to the unbranded rice segment as it would further widen the pricing gap and may result in some transition of demand from branded to unbranded basmati rice. Where is problem? The problem is the different tax rates for differently priced goods which create classification disputes and litigation since there is an inclination on part of the taxpayer to find ways of charging a lower rate. For example GST is zero on some food items. This includes cottage cheese or paneer, natural honey, wheat, rice and other cereals, pulses, flour of cereals and pulses, other than those in containers and bearing a registered brand, in which case GST is 5%. The government is not amused by what businesses are doing. It is one thing to modify goods to avail lower rates and another to misuse the provision.

Misuse has become possible because of multiple rates under GST — exempt, 0%, 5%, 12%, 18%, 28% and 28% plus cess.

Agro & Food Processing July 2017

Central government officials, who had seen classification disputes under central excise duty, were not much in favour of differentiation in rates on the basis of value. The view was that goods under the same HSN (Harmonised System of Nomenclature) should be at the same rate. So after celebrating the implementation of GST in the same synchrony of independence, the government isn’t sure what to do and now is likely to relook at the tax rules for edible commodities following instances of some established brands taking refuge in the norms to claim exemption under the goods and services tax (GST). The issue is likely to be taken to the GST Council. The difference between the taxing system of raw and unpackaged material and packaged trademarked food products forced companies to use this distinction to circumvent the norm to remain in the tax-exempt bracket. A big rice exporter, for example, has sent out a notice to its distributors that its brand of premium packaged rice, which has hitherto been advertised and popular, was eligible to enjoy tax exemption under the GST. Its reason? The company said its application for trademark is still pending and that the brand is not registered. The company has also applied for cancellation of another of its trademark registered brand. Other companies, too, have begun approaching trademark office for cancellation of already granted trademarks to circumvent the norm and join the tax exempt bracket. Government response as of now is that they will relook at the framework and see that such loopholes are plugged. Experts believe that there is a need of some clarity on whether a brand where application has been made could remain exempted. Moreover it is not clear as to whether the brand would be considered as ‘registered’ if an application for trademark has been submitted but not yet approved. There are few companies taking an interpretation that in such cases the product will not be subject to GST. Oils and food Insight The government thinks that the branded food grain merchants earn 50 to 150 per cent margins and hence they need to pay taxes. However, the profit margin for branded food grain manufacturers in Agricultural Produce Market Committee (APMC) trade is only half or 1 per cent

Agro & Food Processing July 2017

GST DIARY

their brands for unique identification and they process good quality raw materials, which is purchased by APMC for higher prices. Now that the products sold by the branded food grain merchants are taxable, they are left with no other option but to deregister themselves and sell their products without a brand name.

net. If they levy 5 per cent tax, their products will become non-viable for the consumers and will be difficult for the merchants to sustain in the market as brands. Truth is that the food grain and pulses

brands that belong to MNCs or bigger firms can afford to fall under 5 percent tax slab. But sadly, most of the food grain manufacturers in India are small and medium enterprises (SMEs), earning low margins. The SMEs have registered

The ugly truth is that only 30 per cent of traders in the state are ready to embrace the change. Most of the APMC markets are not computerized and the traders depend heavily on auditors. In addition, the rural dealers have no clue about GST. The local traders need at least another 8 – 12 months to follow new tax norms properly.

PACKPLUS 3rd – 6th August 2017 Praga� Maidan, New Delhi, India Website: www.PackPlus.in INTERNATIONAL FOOD TECH 21st – 23rd August 2017 Praga� Maidan, New Delhi, India Website: www.foodtechindia.com FOOD PRO 7th – 9th September 2017 Chennai Website: www.ciifoodpro.in INDIAN ICE CREAM CONGRESS & EXPO 15th – 16th September 2017 Bombay Conven�on � Exhibi�on Centre Nesco, Goregaon (E), Mumbai, India Website: www.indianicecreamcongress.com ANNAPOORNA Mumbai 14th – 16th September 2017 Bombay Conven�on � Exhibi�on Centre Nesco, Goregaon (E), Mumbai, India Website: www.tradefairdates.com HKTDC-FOOD EXPO 17th- 21st September 2017 Hong Kong Conven�on � Exhibi�on Centre, Hong Kong Website: hktdc.com/hkfoodexpoFOOD FOOD INGREDIENTS ASIA

13 – 15 September 2017 Bangkok Interna�onal Trade � Exhibi�on Centre, Bangkok, Thailand Website: www.ﬁasia.com ANUGA 7th– 11th October 2017 Cologne, Germany Website : www.anuga.com Drink Technology 26th- 28st October 2017 Praga� Maidan New Delhi Wwbsite: www.drinktechnology-india.com SWOP PACKAGING 7th – 10th November 2017 Shanghai New Interna�onal Expo Centre, China Website: www.mds.cn

Once the brands deregister themselves, a number of problems might arise such as food adulteration and misuse of brand names. If the products are sold without a brand name, retailers or wholesalers might manipulate consumers. If the branded products’ quality falls short, necessary actions can be taken against them. It now becomes difficult to keep the quality of goods in check. The government job was to educate the local traders and retailers about GST, equip them and make them ready to face the new system. This is where the government has failed, and the Jugaadu Indian found the loophole to get exempted from the unjustified tax penalty.

Bakery Bizz 1st- 3rd December 2017 Hong Kong Conven�on � Exhibi�on Centre, Hong Kong Website: hktdc.com/hkfoodexpoFOOD Indian Cold Chain th th 12 – 14 December 2017 Bombay Exhibi�on center indiacoldchainshow.com ANUGA FOOD TEC 20th – 23rd March 2018 Cologne, Germany Website : www.anugafoodtec.com

Agro & Food Processing July 2017

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Agro & Food Processing July 2017

OVERVIEW

The imminent food mogul It is usually referred as “cigarettes to cookies” company, especially after being an unopposed leader in tobacco business its divergence in the packaged food business and there too marking its presence is quite remarkable. ITC’s focus on foods is comprehensible. With more working middle class and double income families, people have less time and like it happened in the western economies, people would like more microwavable ready-to-cook and prepared dishes. ITC took the opportunity to venture and conquer that need of the Indian working class. It acceptance was fast that built up slowing but with trust.. Besides the brand, ITC had its advantage of a strong supply chain that connected a wide retail footprint

t led in tobacco manufacture, in cigarettes, in hotel business, but no one had thought that a cigarettes company would reach the helm of the Indian food industry in a short spans of time when it had challengers which not only a decade old they were centurions too. ITC raced past Hindustan Unilever in the overall foods business and its ambition to be a leader in India’s packaged foods business has now edged a step closer to reality with a 13 per cent increase in sales closing the revenue gap between cookies giant Britannia and the centuryold conglomerate that ranks third on the industry’s leader-board. ITC changed its profile by entering the food business and showing a growth of double digits, which crossed the Rs 8,000-crore revenue mark this year. Its foods revenue is now about Rs 600 crore

Agro & Food Processing July 2017

less than that of Britannia: The gap was Rs 900 crore the year before. Nestle is the country’s largest in this business segment. Nestle India had shown sales of Rs 9,223.8 crore, while HUL’s revenue in packaged food and refreshment businesses together was Rs 5,972 crore. ITC’s packaged food business revenue in 2016-17 increased to Rs 8,036.4 crore from Rs 7,097.5 crore the year before, compared with Britannia’s revenue of Rs 8,684.39 crore (Rs 7,947.9 crore the year before). The pioneer company is now on the path to overtake both Britannia and Nestle in the foods business over the next 2-3 years. The revenue growth would be brought about by the accelerated introduction of new products, and entry into 7-8 newer categories.

OVERVIEW

37 has been procurement of commodities. The agri-business division of ITC connects with 5 million farmers in 170 districts of 16 states. The company uses it to good advantage for all the commodities it requires for the food business: Wheat, sugar, edible oil, potatoes. Such commodities account for almost 60 per cent of the costs of the business. The other advantage has been ITC's retail network for cigarettes. About third of the company's food products apart from flour (snacks, biscuits and candies) are retailed through these shops.

The company plans to introduce about 40 new food products in the next one year — a record for ITC — and has recently started selling premium chocolates and coffee. It is the market leader in packaged flour and premium cream biscuits, and the second-largest player in snacks and instant noodles. ITC had commissioned three companyowned units to cater to the requirements of the packaged foods and personal care products businesses. It is currently developing over 20 more such integrated facilities in various stages of development. The popular brands in the newer FMCG businesses include Aashirvaad Atta, Bingo! Snacks, YiPPee! Noodles, Sunfeast Mom's Magic cookies, B Natural juices, and personal care products under Fiama, Vivel, Engage, and Savlon brands. When it entered the food business In August 2001, ITC made a modest entry into the food business with its Kitchens of India ready-to-eat preparations. The company ran popular restaurants, Bukhara and Dum Pukht, in its hotels. These restaurants, the company felt, were successful because it understood the Indian palate well. Hence, the new line of business.

in Bangalore. It is the market leader in one category -- flour -- and is second in noodles, salt and packaged snack, and third in biscuits. ITC will invest Rs.4, 000 crore over the next 2-3 years to set up 8-9 factories across the country for manufacturing of food products. Food is the second largest business for ITC after cigarettes. The company, which recently expanded its new Sunfeast Farmlite biscuits portfolio catering to health conscious consumers, is looking at tapping this fast growing consumer segment. Health segment of the biscuit market is about 1% of industry right now but it is growing the fastest. Key approach is to have a full portfolio across segments and company plans to make a big play in this segment. And it has turned profitable. Till recently, profitability of this division was a huge concern for ITC. Not any longer. ITC's competitive advantage from day one

The company was also quick to realise that the foods business in India requires sound knowledge of local tastes and preferences. Food habits in the country change after every hundred miles. So, this is a business in which local companies stand a better chance of success. It is an entry barrier for multinational corporations, though the two largest food companies in the country are foreignowned. ITC's biggest brand is Sunfeast -- biscuits and now pasta. In biscuits, ITC is ranked third after Britannia and Parle. The journey so far may have been easy because ITC has grown at the cost of local brands. And of course in these three platforms there is still a lot to be exploited. It is possible to innovate around that. One who does it the best will walk away with the market." ITC’s Sunfeast Biscuits In July 2003, ITC forayed into the biscuits market with its Sunfeast range of glucose, Marie and cream biscuits. Since

A more serious effort was made a year later when ITC launched its flour under the Aashirvaad brand. This was followed by candies, biscuits, snacks, salt, pasta and spices. The size of the food market was just too tempting. Within fast-moving consumer goods, food has always been the largest category. A large part of that is still sold loose; so the upside for packaged foods remains sizeable. ITC has 40 food factories across the country and a product development centre

Agro & Food Processing July 2017

OVERVIEW

and Oats with Chocolate. The company entered into the dairy segment with Ghee in October last year and launched dairy whitener in North East this month. Biscuits are the biggest contributor to ITC Foods top line and premium segments and there plans are afoot to link its mammoth back-end support, the e-choupal network, for biscuits, as well. Currently, it is restricted to the Atta brand, Aashirvaad, but will soon extend it to biscuits.

then, ITC is now well ensconced in the biscuits space, a segment that is relatively inflation-proof. At the time of launch, ITC made a reluctant entry into the glucose and Marie segments. Today, it's a rejigged portfolio and the two segments are not particularly important in ITC's scheme of things. With the shock of being slabbed in 18 percent tax the glucose segment is losing track. Its success or failure depends on the prices of sugar, wheat flour etc. There was a time when this segment was profitable and the old companies capitalized on this, and made it what it is. The perfunctory presence was at the behest of retailers in the market who used to press for a carrier brand and glucose was the category to be in. Sunfeast was not in a position to contradict trade veterans at that point in time. Parle-G, the iconic glucose biscuit brand (in fact, the "G" stood for glucose), and Britannia are the top players in the Rs 6,500-crore glucose biscuit market. But over time, ITC's position on the category was vindicated as market dynamics changed. Today Indians are ready to shell out more and go for the premium and super premium products. On the other hand, segments such as cream and cookies have grown at a much faster rate and cornering a large part of the market. Industrial statistics also show that they are inflationproof to some extent. The glucose market, in comparison, has shrunk, compared to what it used

to be years back Even Parle-G introduced several cream and cookie brands. Other players, such as Cadbury, brought Kraft Food's Oreo to the country, and GSK, which extended its Horlicks brand into cookies, too added to the growth of the premium category. ITC's focus is more into cookies and cream segment. Under Sunfeast, ITC's premium sub-brands come under Dream Cream and Dark Fantasy. The Sunfeast Dark Fantasy Choco Fills is at the premium end of creams segment. In cookies, ITC's presence is limited to the mid-segment, but the company is likely to make further inroads into the market with launches. The biscuit market is already witnessing a shift towards premium products and high margins in the cream and cookie segment is luring biggies to offer more variants in these segments. And Sunfeast is already the leader in the cream segment. And plan to go for cookies which are a desirable segment. The company, which recently expanded its new Sunfeast Farmlite biscuits portfolio catering to health conscious consumers, is looking at tapping this fast growing consumer segment. Health segment of the biscuit market is about 1% of industry right now but it is growing the fastest. Key approach is to have a full portfolio across segments and company plans to make a big play in this segment. Sunfeast Farmlite biscuits also have multiple variants in the Oats range â&#x20AC;&#x201C; Oats with Almonds, Oats with Raisins

Agro & Food Processing July 2017

Flourishing with flour Way back in 2002, when ITC launched Aashirvaad packaged wheat flour, it was a latecomer to the branded Atta market. HUL, with Annapurna and General Mills, with Pillsbury had beaten it by a clear couple of years. Soon however, within four years says the company, the brand had edged past its peers to corner the maximum market share. Today Aashirvaad, ITC says, has 75 per cent of the market - of course, given that wheat in India still is a largely unorganised market, the branded segment is a tiny fragment of the whole. Its main competitor is Shakti Bhog Atta followed by Annapurna and Pillsbury. ITC is hoping to follow the path that Aashirvaad took to get to the top spot for the rest of its branded foods business. Aashirvaad is ITC's brand for staples and is all set to treble its growth in branded wheat flour (Atta) to Rs 9,000 crore as there is tremendous scope for the organised sector. According to a report by ICICI Securities Ltd, ITCâ&#x20AC;&#x2122;s Aashirvaad brand Atta is expected to be the major beneficiary having current market of share of 40 per cent in branded wheat flour if more consumers shift to organised wheat flour. The organised wheat flour market is about 2.5 million tonnes (mt), while unorganised sector has 12.5 mt. India produced 86.5 mt grain in 2015. The expanse of opportunities for ITC can be gauged from the untapped potential in the organised wheat flour market, estimated at Rs 7,500 crore. This translates to a market size of Rs 46,000 crore. The organised wheat flour market currently constitutes about 16 per cent of this potential size. With growing urbanisation and changing lifestyles of Indian households, if more consumers shift to organised wheat flour taking from

OVERVIEW

16 per cent to 50 per cent levels in next four or five years, the market size will grow to Rs 23,000 crore. Bang on with Bingo ITC's most audacious move in foods so far has been Bingo, its ready-to-eat snack, which took on the might of Frito Lays (market share: 60 per cent; brands: Lays, Kurkure, Aliva and Uncle Chipps.) Bingo has grown through some innovative products and kickass promotion. Its share of the Rs 3,000-crore 30 billion) market is 10 to 12 per cent. Frito Lays has hit back with its new range of Indian snacks. Parle too has entered the market with

(Rs

aggression. Sector experts point out another challenge: Bingo's positioning is such that it needs to come out with new flavours and advertisements all the time. Customers can lose interest if product is not innovated constantly. So the company needs to innovate continuously with new textures, flavours and shapes. In terms of flavours, Bingoâ&#x20AC;&#x2122;s target is one or two launches a year. In texture and shape, there should be one new product in two years. There are eight to ten flavours always in the pipeline in various stages of development. YiPPee Noodles ITC entered the instant noodles segment with the launch of Sunfeast Yippee! In

2010. The sourcing and blending expertise that has made Aashirvaad India's No 1 branded Atta has been leveraged to create a delightful noodle block. The block being round in shape does not need to be broken while cooking, providing really long & slurpy noodles. A special scientific process ensures that the noodle does not lump even 30 minutes after cooking. Yippee! Instant noodles are available in four lip smacking variants - Magic Masala, Classic Masala, Power Up Masala and Mood Masala. Magic Masala is a special masala created by ITC with spices and also has five different types of dehydrated vegetables. Classic Masala is the Classical Indian Masala flavour with a perfect blend of spices. Power Up Masala is made from whole wheat Atta and has vegetable additions in every strand. Mood Masala is a differentiated offering with 2 Masala Mix sachets which allows you to choose your taste every time; thus making it a perfect partner for all moods! ITC is the second largest brand in instant noodles with around 33-34 per cent market share It gained this ground when Maggi was off-the-shelves for few months due to a temporary ban by the nation's food regulator. After its relaunch, Maggi continues to dominate more than half of the Rs 2,000 crore instant noodles market. B Natural Juice When ITC bought B Natural in early 2014, the idea was not only to gain a foothold in the fast growing juice market, now pegged at Rs 2,500 crore, but also to become a force to reckon with. While the idea was compelling, there was not much juice in execution. Even after three years, B Natural garnered just 6.3% market share compared to market leader Dabur's Real with 56% and Pepsi's Tropicana with

29.3%, according to latest Nielsen data. Though 6.3% might not be bad, things are poised to turn juicy for B Natural. By rolling out 100% 'not from concentrate' pomegranate juice, challenger brand ITC is taking the fight to the leaders. Its aggressive advertising campaign urges consumers to opt for a 'better' juice brand which is not made from concentrate unlike most of products on the shelf. While the first few years, were all about settling the brand and building awareness, ITC now plans to embark on a path of creating compelling propositions at an accelerated pace. What's equally interesting about the campaign is the move to educate the consumers about juices made from concentrate. When part of the water, says the print advertisement, is taken out from the fruit juice or pulp by heating, it becomes a concentrate. B Natural, ITC lets on, is made directly from pulp and not from concentrate While the effort clearly is to show juice made from 'no concentrate' is a better option - something similar to what Amul has done with HUL, When it exposed that the ice-cream made by its rival was not made from milk fat but vegetable oil ITC insists that it is not taking a dig at its rivals, but this is certainly going to drive consumers to look at their choices more carefully, and ask the right questions when it comes to fruit juices and health. B Natural has branded itself as a 100% fruit juice brand that can be part of a healthy diet and also offers regional flavours in addition to common juices such as orange and mixed fruit. The marketing plank is similar to what other rapidly growing niche brands such as Raw Pressery and Paper Boat have been offering to their largely urban consumers. There is a huge opportunity for truthbased brands and when a brand such as Patanjali punctured myths about products across categories-from honey to oilconsumers flocked to the brand. There are other precedents as well. B Natural too might reap a windfall in terms of more consumer acceptance. The challenge, however, for B Natural would be to match its aggressive intent with marketing and distribution. Another factor to contend would be the reaction of the rival brands who might

Agro & Food Processing July 2017

OVERVIEW

40 find themselves in a spot of bother as 'no concentrate' campaign questions the 'quality' of their offering. Premium fruit and vegetable sale ITC would sell premium fruits and vegetables and pricey processed foods, competing directly with existing retailers and newage grocers such as Amazon Fresh, hastening its transformation into one of India’s most diversified consumer companies from just the country’s biggest cigarette maker. At the core of ITC’s initiatives to expand beyond snack foods is an elaborate distribution network, underpinning a wider product portfolio at the centuryold giant: Seeking to strengthen its Rs 10, 0000-crore diversified consumer business, ITC plans to build a retailing presence rivaling that of Mother Dairy. The company was looking to build its Master Chef franchisee with processed, frozen foods, while fresh produce such as fruits and vegetables will be sold under a separate brand name. Processed foods will include products that have high variability in prices. The entire aspect of perishability has to be dealt through processing, cold chain and backend development, creating consumer demand and behavioral change of getting consumers buying fresh. ITC will also sell online, starting with BigBasket and other existing online channels by next quarter. The profitability of ITC’s consumer goods businesses declined 72 per cent last year to Rs 28.12 crore. The company attributed the contraction to higher input prices, gestation costs of relatively newer categories such as juices and dairy, and sales disruption because of demonetisation. Later this year, the company plans to launch frozen vegetables and fruits. Then it will move on to sauces, dips and condiments. It also has pipeline ready, from low-sugar potato to dehydrated onions to processed mango pulp that are ‘super safe’. Venturing into frozen food ITC Ltd has entered the frozen foods market with frozen prawns as part of its plans to take over Indian kitchens. ITC has launched frozen prawns under its

brand ITC MasterChef. The estimated Rs300-crore packaged frozen prawns market is currently dominated by brands such as IFB, Sumeru, Cambay Tiger. The fresh prawns market in India is estimated at around Rs7, 700 crore.

profitability, some of the lower margin yet high volume products slipped. For instance, in the Rs 25,000 crore biscuit market some of ITC's early share gains came from glucose segment, which isn't a key priority now.

ITC’s frozen prawns, which the company claims have passed 243 quality tests, will be sold in 200-gm packs, priced between Rs185 and Rs350. The frozen fish market will start with New Delhi and Hyderabad markets and will cover seven metro cities by end of the year.

The overall share remained static even as ITC gained in cream and cookies segments. In bridge snack products, a category between ethnic Namkeen and western snacks, ITC has been narrowing the gap with 30% share against market leader PepsiCo that has 34%. Yet, the overall share in snacks remained unchanged as their potato chips business was restricted to southern markets.

The choice of prawns is a natural one for a company whose agri-business division has a presence in the space. The firm has been exporting frozen shrimps for quite a few years to private labels across the world; it exported frozen shrimps and prawn worth Rs400 crore last years. ITC will also look at selling its ITC MasterChef frozen products to restaurants and non-ITC hotels over a period. Leadership dream When ITC entered the food business it came in with the focus to achieve the best but little it know that its ambition to lead India’s packaged foods business is now close to reality with a 13 per cent increase in sales this year closing the revenue gap between cookies giant Britannia and the century-old conglomerate that ranks third on the industry’s leader-board. Four years after ITC went past Hindustan Unilever in the overall foods business, the company evidenced its makeover into a diversified group through double-digit growth in the consumer foods business, which crossed the Rs 8,000-crore revenue mark in March 2017. The company is now the third largest player in the packaged foods market, trailing Nestle and Britannia its market share in two large categories - biscuits and snacks - has been almost stagnant for the past three years. Unusual for the conglomerate that quickly captured about 10% share in biscuits and more than 6% in salty snacks within five years of launch and threatened leadership position of PepsiCo and Britannia in several sub-segments then. To be fair, the company is growing by about 15-18% in the past five years on an average. But as it shifted focus on

Agro & Food Processing July 2017

The competition isn't sitting pretty. ITC's market share skid, despite growing ahead of the industry on an average, was partially due to sudden aggression by rivals, especially Britannia that struggled more than five years ago. Britannia consistently stepped up on new launches and increased investment in manufacturing and distribution. A single percentage point in the biscuits category translates into Rs 250 crore. ITC is trying hard with plans to open manufacturing units in West Bengal, Assam and Punjab to help get tax-benefits and savings in freight costs. Also, in the super-premium segment in biscuits, ITC has a major foothold with no major competition though Britannia is likely to enter the segment. It has also relaunched its potato chips, taking it across India to increase the overall snacks share. For juice division that sells B-Natural, ITC has a 7% share and is targeting double-digit numbers by next year on the back on new launches, especially from region specific fruits such as Kinnow from Punjab. ITC has made public its interest to enter categories including chocolates - launched premium chocolates under Fabelle brand few months ago, dairy through ghee and milk powder, tea and coffee. ITC's strong rural linkages, wide distribution reach of 2 million direct outlets, agri-commodity sourcing, packaging know-how and cuisine knowledge provide significant synergies for this vertical

FEATURE STORY

41 As is so often the case with nascent ingredients, charcoal is indebted to the health-food industry – particularly the trendy cold-pressed juice companies. Although the charcoal doesn’t taste of anything, it adds a surprisingly pleasant granular texture – you feel like you could almost chew the juice as you gulp it down. Besides its merits as an elixir, reverence of activated charcoal extends far beyond health enthusiasts. Some of the top chefs and bartenders are exploring the smoky, bitter and earthy notes of charcoal. In fact activated charcoal is increasingly being used as a key ingredient across restaurants and bars globally. Like in Mumbai(India), MasalaBar (Bandra) serves a charcoal pav bhaji, while Olive (Khar) offers a smoked salmon with avocado mousse in a charcoal bagel. No Vacancy Bar Kitchen in Bandra, terms it the latest ingredient chefs are playing around with. It pairs beautifully with a woody scotch and gives a sleek look to cocktails. It is also a cure for hangover. A few grams of activated charcoal mixed in water offers relief when consumed immediately.

CHARCOAL

Are We Ready for the Newest Superfood On the Block?

fter beauty brands made a big hype of made a big hype of activated charcoal, now it’s the food & health industry that’s making it the latest trend! Like bone broth and kale before it, charcoal has arrived to supposedly help restore and reinvigorate your decaying, toxin-filled body. Yes… it’s edible…and it’s the latest ingredient to have gained a foothold in the world of detoxifying and purification. It’s no wonder then that it’s being used in a variety of preparations that include juice infusions as well as more gastronomically minded creations. What’s So Special about Activated Charcoal? Charcoal can treat alcohol overdose, diarrhea, gas and bloating like magic. This good-for-gut ingredient has also invaded delicacies such as French pastries and is also a commonly found ingredient in Asian desserts. The thinking behind its healing powers is that its adsorbent, which means that other molecules and substances like harmful

poisons from inedible berries adhere to it. In the medical world, it’s used to offset the effects of drug overdoses. Activated charcoal has been treated in a way that makes it ideal for removing potentially toxic substances from the digestive tract. Food grade activated charcoal is not anything like the briquette used for barbecues. The powdered activated charcoal is made from burnt wood or coconut husks. It’s easily ingested in water. Despite the tasteless feature, activated charcoal adds unusual hue in foods and its granular texture turns out to be an excellent detox agent. Due to its insoluble character, the healthy charcoal draws toxin out of the body like a magnet. It can add flavor and texture too.

Most recently, Waitrose has released a charcoal-crusted pizza as part of its premium Waitrose 1 brand, an extension of the charcoal-based products the retailer launched last year. While colourful food has gained popularity among consumers, as seen recently with Starbucks’ famous Unicorn Frappuccino, charcoal could fill the gap at the other end of the colour spectrum. Part of charcoal’s growing appeal comes from its chemical composition, which is claimed to reduce intestinal gas and lower cholesterols levels. Such attributes have contributed to charcoal’s positioning as a potential detoxifying ingredient, making it appealing for food and drink manufacturers. However, manufacturers need to be aware of shoppers’ skepticism around charcoal in food. Results from Global Data’s 2017 Q1 global consumer survey show that while 23% of global shoppers think that charcoal is effective in the beauty and grooming

Agro & Food Processing July 2017

FEATURE STORY

of the body. It doesn't have the tendency to get reabsorbed and comes studded with antiviral, antibacterial and anti-fungal properties - another brownie point! Charcoal has beneficial properties, there is no second opinion about it, but you need to be cautious with the amount you are adding to your diet. When consumed in moderation, it works wonders for cleansing intestines and pushes undigested food out of the system.

industries, just 17% think it will have a positive impact on their health as an ingredient in food and drinks. Conversely, nearly 40% think that charcoal may have a negative impact on health, while one third maintain it will be ineffective. With this in mind, food brands should focus on using charcoal as a natural food colorant rather than a health ingredient. Manufacturers should capitalise on consumer willingness to experiment with novelty and unique items. Origin story Activated charcoal is made by burning coconut shells and collecting the carbon, which is then immersed in hot water. This extract is believed to absorb 100 times its weight. So, theoretically, one tablespoon of charcoal can absorb an entire football field of charcoal. There is a significant difference between charcoal and coal: the former is edible, while the latter is not. Marketed today as an ingredient beneficial for a detoxcharcoal has traditionally been used for dental care and as a cure for flatulence. Charcoal-based carbon filters have also been employed to purify water. The black hue that activated charcoal adds to a dish is an effective way to attract patrons’ notoriously fleeting attention. Like most food trends, using activated charcoal, too, was popularized by the West. Reality TV stars Kim Kardashian and actor Gwyneth Paltrow swears by activated charcoal in cold-pressed juices, and charcoal latte is now a rage in the US, and even the Middle East. Weighing the benefits But why you would want charcoal-

infused dishes on your plate, you may wonder. For one, activated charcoal bonds with toxic substances and gets rids of them. However, you need to be careful with how much charcoal is used in the dish. As a supplement, 75mg of activated charcoal is recommended twice a day. As for the colour, it takes time to grow on you. But interestingly, apart from being a detox ingredient, the very fact that it’s black could also help you in watching your calorie intake. Food visually, each colour gives us a specific feeling. If you want to lose weight, it is recommended that you eat in a black plate or bowl. However, the ingredient du jour has its fair share of critics too. After all, there no studies to substantiate its detoxifying affect, and thus some food historians point out that charcoal has been used as a purifying agent and for medicinal purposes, its activation dates back to the mid-19th century. This is a passing fad that piggybacks on a blend of modern science and traditional home remedies. It won’t be surprise if activated charcoal gets passed on for something newer and fancier. For now, if the health benefits aren’t convincing enough, bear in mind that black-coloured burgers and cocktails make for trendy Instagram pictures. The debate Charcoal finds a mentioning in ancient Chinese medicine. Its purifying properties make it an instant hit with beauty and health experts. Charcoal has the ability to stick to any form of impurity, therefore when added to food; it cleanses your system and flushes unwanted matter out

Agro & Food Processing July 2017

Charcoal is 'activated' when manufacturers heat common charcoal with a gas, which increases its surface area and cause it to develop 'pores'. When ingested, these pores mean that the charcoal is able to absorb toxins and other bad substances to its surface area, and remove them from the body. This, along with charcoals supposed debloating and teeth whitening abilities, is why the substance became the Superfood on everybody's wish list. Though it is a fact that activated charcoal's interaction with any ongoing medication can hamper the body's ability to absorb the medicine. Also, if you happen to add a sprinkling of the black powder in your detox juice, chances are that you might not even get all the nutrients of your power-packed drink.

Charcoal or activated carbon doesn't have any direct relation with any of the Ayurvedic preparations, however, certain items, like amla or coconut shells, are often charred black and used as medicinal remedies to resolve a host of health issues. Amla powder is charred and used in preparing a remedy to curb vomiting. Activated charcoal is used in the emergency treatment of certain kinds of poisoning. It helps prevent the poison from being absorbed from the stomach into the body," as stated in a study by the US National Library of Medicine. While charcoal happens to bask in the glory, the world of health and fitness stands divided on its apparent wonder. On one hand it is touted as a detox and purifying agent, while on the other hand its ability to obstruct the absorption of essential nutrients in the body shouldn't be brushed under the carpet.

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Agro & Food Processing July 2017

BEHAVIOURAL ECNOMICS

ACE Technologies manufactures Industrial purpose conveyor systems

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Jain Farms will take up mango planting to TN and Karnataka

ain Farm Fresh Foods Ltd (JFFFL), a wholly owned subsidiary of Jain Irrigation Systems is aiming to make mango farming sweet for over 3 lakh farmers in Southern India by 2027. JFFFL began the exercise by inviting around 600 mango farmers from across the state to its facility at Elayamuthur near Udumalpet. JFFFL officials explained the salient features of Ultra High Density Plantation method in mango and tissue culture for banana and pomegranate. They demonstrated drip and sprinkler irrigation systems and shown the farmers mango nursery, particularly the UHDP mango farm said to be the oldest in India. Managing Director of JFFFL, Sunil Deshpande, said the company is focused on improving farmers’ economic empowerment through adoption of Good Agricultural Practice (GAP) and extension of Project Unnati. “Project Unnati is a sustainable agriculture initiative, introduced initially in Andhra Pradesh in 2011. Over 22,000 farmers have been successfully trained in AP in the pilot phase of this project. We are extending it to the farmers in Tamil Nadu

and Karnataka. This programme is in association with FMCG major Hindustan Coca-Cola Beverages.” He also added that mango farmers in these two southern states will be trained in advanced cultivation practices aimed at doubling their farm income, besides ensuring earliness in farm income. “To ensure that the technology is available at the farmers’ doorstep, JFFFL has decided to ply custom-built mobile classrooms in buses. These buses will move and reach farmers even in remote areas, impart hands-on training in grafting, pruning and top working, sensitise them with videos and power point presentations on mango cultivation techniques.” International Finance Corporation, the financing arm of the World Bank Group, would facilitate the training services under the Unnati programme in all the three states, Deshpande said. “The UHDP technique enables planting of 600 trees an acre as against 40 to 70 trees/ acre under the conventional method and the canopy maintained in such a way as to

Agro & Food Processing July 2017

get maximum light interception. The gestation period is also less. The orchards start commercial bearing from the 3rd or 4th year onwards against 7 to 9 years under traditional planting.” Deshpande elaborated, “utilising drip offers twin benefits — improving yield per acre and decreasing use of water simultaneously for every kilogram of mango produced. Special care for nutrition management and pest control is also undertaken in the project. UHDP is a viable solution in all areas where mango is grown traditionally.” K Ramasamy, Vice Chancellor, Tamil Nadu Agricultral University commenced the Unnati training buses at the Jain AgriIndustrial Park in Elayamuthur. Umesh Malik, Vice President PAC, Hindustan Coca-Cola Beverages, said the company is one of the largest buyers of Indian agricultural produce. “Our investments and interventions in sustainable agriculture will provide a boost to the local suppliers and the agriculture sector in India.”

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Agro & Food Processing July 2017

NEWS

Secratry focused on tech importance to boost export

ommerce Secretary Rita Teaotia has asked exporters of organic goods to certify their products as it helps increase competitiveness in the global markets. She also added that the industry needs to work on areas like exploring new markets, increasing value addition and using new technologies to boost agriculture exports. India's agri exports stood at USD 34 billion in 2016-17 and huge potential exists to increase the numbers. India needs to emphasize on value addition as it is a matter of concern when it is seen that agri products actually go to other countries for even primary processing or value addition. The whole food industry needs to work together for value addition. Technology upgradation is the other area where special focus is required as very few units are investing in R&D and working on traceability aspects, said Teaotia. This

willl help in entering into new markets and there is a need to invite global buyers in India and show them the entire value chain like quality aspects. Inviting foreign buyers would also expose domestic exporters to new export destinations. Talking about the quality of agri products, Teaotia said system of traceability and origin of commodities are becoming important to export products in markets like Europe and the US. "Our value chains are fragmented. It requires lot of work and we also have to fix accountability." In 2015, the total agri exports in the world was aggregated at USD 1.75 trillion and

India is the seventh largest exporter in this field. Its main export destinations are Vietnam, UAE, the US, Korea, Iran, Iraq and Nepal. APEDA's export basket include pickles, rice, honey, fresh and processed fruits and vegetables, beverages, guar gum, poultry, livestock products, flowers, food grains and aromatic plants.

‘Maharashtra framing agri-processing policy to bring investment

fter announcement of loan waiver for small farmers in Maharashtra in the wake of protest by cultivators, Chief Minister Devendra Fadnavis emphasised on the need to link agriculture to industry with a view that farmers remain debt-free in future. He said the government is framing an agro-processing policy to bring investment in the sector and provide a fair value for agri produce. With spiralling protests in state by farmers for a complete farm debt writeoff and guaranteed minimum support price (MSP) for their produce, Fadnavis announced a loan waiver for small and marginal farmers. “Since the past 15-20 years, farmers have been complaining that farming is no longer affordable. So, we feel food processing is the best solution, and we are already working on framing the policy.” The proposed policy would enable farmers

to process their perishable produce like vegetables and fruits on a large scale. “We will be creating decentralised units, cold chains, warehousing and promote creation of farmer producer organisations (FPOs). This will bring in private investment and in-turn help the farmers get the best price for their produce. It is important to link agriculture with the industry to ensure farmers remain debt-free in future,” cm said. He said though the government has announced the loan waiver for farmers,

Agro & Food Processing July 2017

especially from regions like Vidarbha, Marathwada, north Maharashtra and droughtaffected areas, it is necessary to ensure they don’t become debtladen again. “We have seen in 2008, when the loans were waived, that these farmers again accumulated debt. Therefore, we need to come up with such a model such that after their loans are waived, they can, through food processing, become self-sufficient. We need to create a sustainable model for them, otherwise waiving off the loan will be of no use.” The government is working towards providing solar feeders for farmers to ensure 12-hour power supply for agropumps across the state.

NEWS

PM launched Agro-Marine processing scheme 'SAMPADA'

rime Minister Narendra Modi launched agro-marine processing scheme SAMPADA to promote food processing and create job opportunities for the youth. “There are immense possibilities for agro product valuation and the Rs 6,000 crore SAMPADA (Scheme for AgroMarine Processing and Development of Agro-Processing) will go a long way in developing food processing industry and creating employment opportunities for the youth," he said after the foundation stone ceremony of the Indian Agriculture Research Institute in Dhemaji district. Modi said, “initially there will be an

investment of Rs 6,000 crore and later we will go in for public-private partnership which will include foreign direct investment. At the completion of three years of the NDA government, I have decided to make this announcement for the agriculture sector as there are much possibilities, particularly for the youth of the country.” PM Modi also highlighted that finished products like juice and pickles add more value to raw materials produced by farmers and at the same time create employment and export opportunities. Urging the youth of the North-East to

take advantage of the scheme, he said “The North-East will be the new engine for a new India and the term NE will mean new economy, new energy and new empowerment.” He spoke of new possibilities of not only connecting the North-East with the rest of the country but to ensure it emerges as a hub of new economy. This will be achieved by following the panch path (five paths), with focus on infrastructure development such as highways, railways, waterways, airways, and I(information)-way.

Food deficit J & K indicates progress in farm output level

nion Agriculture Minister Radha Mohan Singh said Jammu and Kashmir, a food deficit state is making remarkable progress in the production of some of the important crops like paddy, maize and vegetables. The hilly state imports nearly 7 lakh tonnes of foodgrains annually. The lower farm production is mainly due to mono-cropping system, fragmented land holdings as also geographical and climatic conditions. Addressing a farming community in the state capital, the minister said “In order

to bridge the gap between the production of foodgrains and consumption, the state is striving to increase production level of various crops including food crops.” The state is implementing the centrally sponsored agri- schemes to boost the farm output. The latest data shows that Jammu and Kashmir has achieved remarkable success in enhancing the production level of some important crops like paddy, maize, vegetables and saffron. On setting up of a saffron park in Pulwama district of south Kashmir, minister said that 24.45 crore park is

likely to be operational by November 2017. The National Horticulture Board is entrusted with the task of establishing the park in Pampore, Pulwama, which will have facilities of quality control lab, export promotion activity and e-auction centre, Singh added. He even noted that India can become one of the world's major economic powers by developing agro-processing industry. The government has launched new schemes including distribution of soil health card, expansion in irrigation facilities, low-cost organic farming, national e-market among others.

SBI aims 10 lakh farmers via its all-India meet to boost agri loans

tate Bank of India (SBI), the country’s largest lender, will organise a farmers’ meeting across 15,500 rural and semi-urban branches and move to increase its farm loans. The bank hopes to reach out to at least 10 lakh farmers through this nation-wide farmers’ meet on the day. In view of the upcoming Kharif season,

we have instructed branches to actively pursue lending to farmers in line with the scale of finance fixed for various crops. For crop loans up to Rs 3 lakh, the effective interest rate is only 4 percent per annum, if the repayment is made on time. Amid farm loan waivers announced in two states (Uttar Pradesh and Maharashtra) at a time when the farm sector is going through a period of stress in various other states of the country as

well, SBI has initiated steps to reach out to the farmers. SBI's market share under agricultural finance has increased to 29 per cent. The bank's various loan products under agriculture portfolio like produce marketing loan, tractor loan have helped the lender distribute its risk and improve its asset quality.

Agro & Food Processing July 2017

NEWS

SEA demanded to raise import duty on edible oil

dible oil industry body Solvent Extractors’ Association (SEA) fears that farmers may shift from oilseed cultivation to some other crops as domestic prices have crashed to fiveyear low. The association demands that the government raise import duty on edible oil and boost procurement to check sliding domestic prices and protect interest of farmers as well as processors. In a letter to its members, Solvent Extractors’ Association (SEA) President Atul Chaturvedi said prices of soyabean, mustard and groundnut have fallen below the minimum support price (MSP). He demanded that import duty on crude edible oil be raised to 20 per cent and refined oil to 35 per cent. “After two years of drought, the current year has witnessed oilseed production rebounding. However, the increase in production has not brought any cheer to our farmers as prices have collapsed below the MSP levels. Probably, for the first time in decades, soyabean, rapeseed and groundnut have moved below MSP. Current price level is the lowest in the last five years and farmers are discouraged to sow oilseeds in kharif season.” To ensure that farmers do not lose their

interest in oilseed cultivation, he said the association wants hike in import duty as a short-term measure to support the price. “Currently, oilseeds are being sold below MSP and there is hardly any Market Intervention Operation (MIO) to support these price levels. While we appreciate the government’s decision to raise the MSP to support farmers, there is an urgent need to strengthen procurement system, otherwise it will not benefit farmers,” Chaturvedi said. Government has increased the MSP substantially to cool down farmers’ agitation in various states. Minimum support price of soyabean, a major crop in Madhya Pradesh has been raised by Rs 275 per quintal to Rs 3,050 per quintal. Groundnut-in-shell and sunflower seed MSPs have been raised by Rs 230 and Rs 150 per quintal respectively. Their support prices now stand at Rs 4,450 per quintal and Rs 4,100 per quintal. Nigerseed MSP has been increased to Rs 4,050 from Rs 3,825 per quintal and sesamum MSP to Rs 5,300 from Rs 5,000 per quintal. Chaturvedi also raised concern over 30 per cent rise in import of edible oil during last month despite bumper oilseed

production in the country. “Import of edible oil during May 2017 jumped by 30 per cent compared to May 2016 and overall import for November 2016 to May 2017 is more or less the same for the last year. On one hand we had a record oilseed crop and on the other hand we are forced to import larger quantity of vegetable oils.” Chaturvedi added that while farmers are reluctant to sell the produce below MSP, industry is unable to pay them higher price due to large-scale import of edible oil at lower duty and disparity in processing. “Government must regulate inflow of refined edible oil import through tariff measures to enable market forces to pay a remunerative price to farmers.” India imports more than half of its vegetable oil requirement. At present, the import duty on crude palm oil and crude soft oil is 7.5 per cent and 12.5 per cent respectively, while duty on refined palmolein is 15 per cent and 20 per cent on other refined oils. Soyabean, groundnut and sunflower are grown in kharif (JulyOctober) season. The sowing operation has started with onset of monsoon, which is projected to be normal this year.

Safal to open two F&V outlets in Bhubaneswar

other Dairy Fruit and Vegetable Pvt Ltd (MDFVPL), a whollyowned subsidiary of National Dairy Development Board (NDDB) under its Safal brand is isready to open two fresh fruit & vegetable outlets in Bhubaneswar, Odisha in collaboration with oil marketing company to benefit both consumers and farmers. The initiatives will include activities like educating the farmers on crop plan, good agriculture practices, training and other requisite inputs.

offering fresh F&V, will also make available Mother Dairy branded dairy products, Dhara branded range of edible oils and SAFAL branded products.

Safal will also be promoting Farmer Producer Organizations (FPOs) that aims to streamline quality procurement and also give producers remunerative price.

Safal through its outlets seeks to undertake the twin objective of making available fresh, quality and safe fruits and vegetables to consumers at affordable prices on the one hand and provide market linkage to F&V growers of Odisha and give them remunerative prices for their produce on the other.

Union Petroleum Minister DharmendraPradhan is slated to inaugurate the first two Safal fresh fruit and vegetable (F&V) outlets at a BPCL petrol pump in Unit II here. These two retail outlets, apart from

Safals efforts to provide market linkage for fruits & vegetable growers will also entail enhancing farm productivity, through agronomic intervention for key horticulture crops such as banana, parwal, tomato, brinjal, chilli and okra.

With adequate water availability, Odisha has a large potential in varied horticulture crops, MDFVPL officials said. Safal is already procuring leading varieties of Mangoes such as Langra, Amrapali, Dushehry and Malika from the districts of Mayurbhanj and Dhenkenal through Farmer Organisations, which this year has grown by almost 3 times over last year.

Agro & Food Processing July 2017

The company has already established mango sourcing base in the districts of Kandhamal and Ganjam and plans to procure mangoes from these districts as well during the next season.

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Agro & Food Processing July 2017

FOOD TRENDS

Food regulator issues draft regulations for organic food products

he Food Safety and Standards Authority of India (FSSAI) has come out with a draft regulation for organic food products, seeking to ensure that these food items are actually organic. Organic foods will have to comply with the provisions under the National Programme for Organic Production (NPOP) administered by the government or the Participatory Guarantee System for India (PGS-India) run by the Agriculture Ministry or any other standards notified by the food authority. The food regulator has sought public comments of the draft regulations has been prepared in view of rising demand for organic food products being considered as healthy in the country. FSSAI said organic food products are either that grown under a system of agriculture without the use of chemical

fertilisers and pesticides or made from organically produced raw materials. Currently, a number of food products are being marketed as organic. The regulator said that consumers do not have any way to check the authenticity of organic food products due to lack of a regulatory framework. “The draft regulation on organic food is aimed at overcoming this problem and ensuring that what is sold as organic food is really organic.” The draft regulation mandates that labeling of organic foods should convey full and accurate information on the organic status of the product. Organic food products should also carry a certification mark or a quality assurance mark given by any of the notified certification bodies. The FSSAIs draft has exempted organic

food marketed through direct sale by the original producer or producer organisation to the end consumer from verification compliance. However, this exemption does not apply to processed organic products. FSSAI has defined organic agriculture as a system of farm design and management to create an eco system of agriculture production without the use of synthetic external inputs such as chemicals, fertilisers, pesticides and synthetic hormones or genetically modified organisms. Organic farm produce means the produce obtained from organic agriculture, while organic food means food products that have been produced in accordance with specified standards for organic production, as per the draft.

Food regulator promotes fortified food

he Food Safety and Standards Authority of India (FSSAI) said it was promoting fortification of micro-nutrients in staples to fight malnutrition. FSSAI CEO PawanKumar Agarwal said at an interactive session with Bharat Chamber of Commerce on food safety. “We are trying to encourage brands to fortify their products. We are targeting five staple foods including rice, wheat, milk and edible oil for fortification.”

There is no plan currently to make fortified staple food mandatory but government will keep a close watch. “If found voluntary acceptance is low then government may take step to make it mandatory,” he said. India ranks poor in global standards in nutrition index and thus FSSAI was trying to promote fortified food. Agarwal said several brands will soon come out with fortified atta including from brands

like Ashirwad, Patanjali and Pillsbury. “We are also holding dialogues with some 10-20 millers for fortifying atta”. Meanwhile, FSSAI is trying to work out with the state government to encourage tea garden companies to supply fortified food to its workers. “We are holding discussions with stakeholders to see how fortified food can be supplied to tea garden workers can be worked out," Agarwal added.

FSSAI favours extension of ban on milk imports from China

he Food Safety and Standards Authority of India (FSSAI) recommended extending the ban on import of milk and milk products from China for another year up to June 23, 2018. This suggestion includes products containing milk and milk solids as ingredients such as chocolates and confectionery products. An advisory from FSSAI declared that “Ban on import of milk and milk products including chocolates and chocolate products and candies/ confectionery/food preparations with milk and milk solids as

ingredients from China may be extended for a period of one year up to June 31, 2018 or until their safety is established on the basis of credible reports and supporting data, whichever is earlier.” The food regulator made this recommendation after a review of the ban was conducted in consultation with other ministries and government departments on June 12. The Directorate General of Foreign Trade had first imposed this ban for three months in September 2008. That was

Agro & Food Processing July 2017

further extended for another six months up to June 23, 2009, and included ban on import of chocolates and chocolate products and candies, confectioneries and food preparation which contains milk and milk solids as an ingredient. Since then, the ban has been extended several times, with the last being up to June 23, 2017. Ever since 2008, there have been global concerns regarding the safety of Chinese milk after presence of toxic industrial chemical- melamine which is used to make plastics and fertilisers.

Agro & Food Processing July 2017

NEWS

Food regulator turns down NADA’s request to frame food supplement standards

he National Anti-Doping Agency (NADA) recently approached the Food Safety and Standards Authority of India (FSSAI) with a request to frame standards for these supplements because they were deeply worried about the mushrooming variety of off-theshelf food supplements and possibility that some of them contain banned performance enhancing substances. After several meetings between both the parties, FSSAI declined the request stating that given the nature of expertise and sports medicine knowledge required to do so is beyond their mandate. NADA officials approached FSSAI over concerns that rapidly increasing gyms in urban and rural areas were pushing some of these supplements and there is no control or monitoring over what they contain. hence, FSSAI should frame standards. FSSAI agreed in principle regarding the issue expressed by NADA wherein a section of the authority was keen to go ahead with the exercise, but in the end the authority decided not to. A senior official said though the NADA’s concerns were genuine, there were certain issues that was not in favour of NADA. “The concerns they raised were genuine. Food

supplements are sold over the counter and often pushed by gym instructors may contain performance enhancing substances banned for athletes or substances that are just generally harmful for people if used indiscriminately. There may even be prescription drugs that ordinarily cannot be bought over the counter but have an anabolic (bodybuilding) effect on the body.” After numerous discussions and meetings with NADA, FSSAI concluded that they could not frame standards from NADA’s perspectives and yardsticks. It was beyond their mandate. “We deliberated over the matter, had meetings with

added.

NADA and decided that we cannot frame standards from the perspective they want us to. It is beyond our mandate — there is a long list of banned substances, some that are not to be used during competitions but can be used otherwise, and others that can never be used. Then there is also the matter of dosage. So we told them that it is beyond our mandate,” the official

Last year, FSSAI had notified standards for health supplements, nutraceuticals, and foods for special dietary use, food for special medical purpose, functional food and novel foods. The regulations stipulated by the FSSAI mentions that “the articles of food with standard nutrient or nutritionally complete formulation shall consist of a composition delivering the desired level of energy, protein, vitamins and minerals, and other essential nutrients required for respective age group, gender and physiological stage in accordance with the guidelines made by the Indian Council of Medical Research.”

FSSAI to address concerns upraised by the industry on new standards on health supplements

he Food Safety and Standards Authority of India (FSSAI) isgoing to address concerns upraised by the industry on new standards for eight categories of products, including health supplements and nutraceuticals. These standards will come into force for compliance from January 1 2018, Pawan Agarwal, Chief Executive Officer of FSSAI, stated that the standards of nutraceuticals were released by the food regulator a few months ago after very prolonged deliberations by the scientific panel, scientific committee and then the authority. There are associated standards and regulations, and the key amongst them being labelling regulations, claim regulations for which again the draft will soon be available on FSSAI website.

These are also quite contentious issues considering that consumers' interest for any regulator is primary and is nonnegotiable. So any food supplement manufacturer giving any kinds of claims has to be extra cautious and as a regulator we have to ensure that those claims are substantiated with evidence. The challenge with the food supplements is that there is no robust framework for testing of food supplements products. There are also issues about good manufacturing practices around food supplements and nutraceuticals sectors. FSSAI had set up a technical panel with representatives from food supplement companies to put together the framework for goods manufacturing practices (GMPs) for nutraceuticals and food supplements.

Agro & Food Processing July 2017

FSSAI intends to provide them a levelplaying field. But considering the 'Make in India' campaign of the government, their focus is on promoting much of processing and manufacturing within India. For the sake of food Industry it is imperative for both the industry and government to work together to provide a more robust framework for growth of food supplement and nutraceuticals sector in India. There is an immediate need to make the food supplements and nutraceuticals affordable as about 43 per cent children across India remain malnourished while the sector mainly caters to the middle and upper-middle class consumers.

SUCCESS STORY

Fortified milk needs to address health issues

est Assam Milk Producers Cooperative Union Limited, popularly known as Purabi, has decided to fortify its Smart Milk (toned milk) with vitamins A and D to eradicate micro-nutrient malnutrition. Present at the launch of new packets of fortified Purabi Milk, Minister for Veterinary and Animal Husbandry Atul Bora said, “There is an urgent need to fortify milk to address various health related issues and the Assam government will give full support for its successful implementation.” The fortification by WAMUL has been initiated to support the nation-wide fortification initiative of FSSAI and Tata Trusts. Now it’s fortified milk will be available in a new blue pack with FSSAIs ‘+F’ logo. Bora said, since milk is consumed by all population groups, fortification of milk with certain micro-nutrients is a good strategy to address micronutrient malnutrition. It is very much essential for overall growth of a human body", Tata Trust Director of Nutrition Programme Dr Rajan Shankar said. As a part of its

UP, Maharashtra, Rajasthan, and Tripura in co-operation with the state governments. FSSAI has recommended fortification of milk with Vitamin A-770 IU per litre and Vitamin D-550 IU per litre and these recommendations have been endorsed by the National Dairy Development Board (NDDB). India is the largest producer of milk in the world with 146.3 million tonnes of production and per capita availability of 322 grams per day.

nationwide campaign, Tata Trusts are intensifying work on improving maternal and infant nutrition besides large-scale food fortification, aiming to reduce incidence of malnutrition by 25 per cent in the five states of country in the next five years, he added. The trusts are currently carrying out various programmes in Andhra Pradesh,

WAMUL procures milk from nearly 200 village-based milk producer institutions (MPIs) and dairy cooperative societies (DCS) in the districts of Kamrup, Morigaon, Nagaon, Barpeta and Nalbari covering around 5,000 dairy farmers. With quality and health conscious consumers preferring packed parsteurised milk, Purabi has crossed a daily average sales of over 55,000 litres of packed liquid milk in the markets of Guwahati and towns like Jorhat, Nalbari, Rangia, Nagaon, Tezpur, and so on. The new fortified Smart Milk will be available from June 1st coinciding with the World Milk Day in all stores.

Amul has to go off air with frozen dessert advt: Bombay HC

n an amnesty to Hindustan Unilever Ltd (HUL), manufacturer of Kwality Walls ice-cream and frozen desserts, the Bombay High Court restrained Amul from airing an icecream commercial.

The court also refused to stay its order and said it cannot allow Amul to indulge in negative campaigning against its rival companies.

Justice S J Kathwalla allowed application filed by HUL seeking injunction against the advertisement of Amul which claimed HUL ice-creams where frozen desserts made out of vegetable oil and hence not safe to consume.

Senior counsel Ravi Kadam appearing for Gujarat Cooperative Milk Marketing Federation Ltd, maker of Amul ice-creams had defended the commercial and said that the ad doesn’t denigrate HUL’s frozen desserts. He said the ad was merely informative as it informed society and consumers that frozen desserts contain vegetable oil — Vanaspati oil.

Justice Kathawalla said, “I have considered the content, intent of the commercial, manner and storyline of the commercial and the message sought to be conveyed by the TVC in totality and it has become crystal clear that the same are shown with the sole intention of disparaging the entire category of frozen desserts.” The court said in its 87-page judgment,

“from the storyline and manner of the commercial, it can be clearly seen that the message that is sought to be given is that all frozen desserts contain vanaspati/ vegetable oil and that all frozen desserts are necessarily unhealthy and harmful and should not be purchased and consumed.” The court noted that the commercials are being televised repeatedly and hence disseminating wrong information and creating confusion among viewers.

HUL’s counsel Virag Tulzapurkar said the ad specifically mentions vanaspati in hindi while other parts of the ad are in english and it is so done to target a larger audience in disparaging its frozen dessert products.

Agro & Food Processing July 2017

SUCCESS STORY

Maharashtra has tremendous potential in dairy sector

nion Agriculture Minister Radha Mohan Singh said Maharashtra throws a tremendous potential for the dairy sector. Singh was present at the inauguration ceremony of Nagpur Dairy Plant and a Mother Dairy milk booth in Nagpur. “There is a tremendous potential for working on the development of dairy in Maharashtra. In Nagpur, Vidarbha and Marathwada, the dairy profession can be a major source of livelihood for rural households.” Singh said that according to the data of May 28, 2017, the total production of

milk in 2015-16 reached 156 million tonnes, which is an increase of 6.28 per cent annually.

Highways and Shipping Minister Nitin Gadkari and Maharashtra Chief Minister Devendra Fadnavis were also present.

“Milk production during 2014-17 has increased by 16.9 per cent as compared to the year 2011-14. Per capita availability of milk in India is 337 gram/day while world average is only 299 gram/day.” He added, Maharashtra’s milk production increased from 9.54 million tonnes in 2014-15 to 10.1 million tonnes in the year 2015-16 with a growth rate of 6.4 per cent, which is more than country’s growth rate, but per capita availability of milk has been 239 gram/day in 2015-16 which is substantially lower than national average. On this occasion, Road Transport &

In a separate statement, Mother Dairy said it will invest around Rs 65 crore to upgrade the Nagpur plant and setting up of milk procurement network in the regions of Marathwada and Vidarbha. A part of the investment would also be made towards development of sales network across the city with 100 milk booths at key spots. “The milk procurement set up in the initial 3 years will cover around 3,000 villages across 11 districts covering about 60,000 farmers," it added.

Quality Logo will bring process improvement in the entire value chain: Radha Mohan

o ensure availability of quality milk and milk products. Union Agriculture Minister Radha Mohan Singh on Thursday launched National Dairy Development Board’s (NDDB) quality logo, which dairy cooperatives can use after complying with quality norms. While launching NDDB's Quality Mark the Union Agriculture Minister said, "The Quality Mark will provide dairy cooperatives and producer institutions, the much-needed brand identity and a competitive edge. This will also contribute to building consumer confidence in dairy cooperative brands." He conveyed that the Quality Mark is aimed at bringing about process improvement in the entire value chain from producer to the consumer, to ensure availability of quality milk and products. The 'Quality Mark' logo will be valid for three years and surveillance audit for checking compliance with quality norms will be held once every year by National Dairy Development Board (NDDB), an apex dairy sector body. "NDDB's Quality Mark will provide dairy cooperatives and producer institutions the much-needed brand identity and a competitive edge," Singh said in a statement. This will bring

process improvement in the entire value chain from producer to consumers to ensure availability of quality milk and milk products, he said. An 11-member management committee will oversee the activities of Quality Mark. The panel comprises members from agriculture ministry and managing directors of four dairy federations as also representative of food safety regulator FSSAI and two dairy experts. Minister of State for Agriculture Sudarshan Bhagat, "Operational norms for participating dairy units will be monitored and validated. The assessment is a two-step process involving preassessment and a final assessment. The pre-assessment largely covers the village-level procurement and processing infrastructure availability, training manpower and the retail sales. Only those dairy units that score over 70% in the preliminary assessment are considered for final assessment which is done by a team of up to three experts of which one is an external expert. The final assessment is made for the evaluation of critical and major parameters that influence the quality of the processed milk and milk products." Dilip Rath, Chairman, NDDB informed,

Agro & Food Processing July 2017

"The award of Quality Mark shall be valid for three years subject to maintenance of quality, food safety standards and compliance with terms and conditions of the agreement. Though the validity is for three years, the surveillance audit for checking compliance with the norms of quality mark shall be held once every year." Chairman, NDDB said that since rollout of the initiative in last year, NDDB has received 55 applications from the cooperatives across the country till July 2017. Of these, 14 units have successfully cleared the two-stage assessment process. The remaining 31 dairies were informed about the areas of improvement. They have been given 6-9 months’ time for implementing the corrective measures. Devendra Chaudhry said that this initiative of NDDB will facilitate and strengthen the efforts of FSSAI. It will also create requisite awareness among various dairy units across the country for adopting the quality measures detailed in the guideline document. Minister presented quality mark logo certificates to 14 dairy manufacturing units for adopting food safety and quality management systems and adhering to Quality Mark parameters.

Agro & Food Processing July 2017

NEWS

Energy efficiency in the food industry

ecentralised supply concepts and renewable energy sources pave the way for the climate change In the scope of the Paris climate protection agreement, Germany has committed itself to reduce its greenhouse gas emissions by 2030 by 55 per cent compared to the level of 1990. Only two things can help here: Designing the processes as energy-saving and efficiently as possible and relying on renewable energy. Which technologies do the food and beverage manufacturers need to reduce the consumption of energy in the production processes? Anuga FoodTec from 20 to 23 March 2018 in Cologne will provide the answers to this question. Everyone is talking about the energy turnaround. At Malzers in Gelsenkirchen this principle has long since become everyday routine. For two and a half million Euro, the industrial bakery installed a gas-driven combined heat and power (CHP) plant including a twelve-cylinder engine, which drives a generator to produce energy. Since then, combined with a photovoltaic system spanning 7,000 square metres, Malzers has been generating around three quarters of the required energy consumption itself. Furthermore, the CHP plant provides heat, refrigeration and steam and is coupled with an absorption cooling system - in this way the waste heat that is not needed in the summer can be implemented to refrigerate the raw materials. The fact that the company reduces its carbon dioxide emissions by 2,000 tonnes a year demonstrates that this is not purely conceived as an economic solution, but also protects the environment. Components for a sustainable energy supply The coupling of power and heat is one of the key technologies demonstrated at Anuga FoodTec that enables the food manufacturers to become less dependent on energy suppliers. In Germany, the final energy consumption of the industry has remained at a constant level of around 60 terawatt hours a year for several years. The rising energy prices are becoming an ever-increasing cost factor, where each

saved kilowatt hour counts. The average share of the energy costs in the value chain of the milk industry is around five to eight percent, in the meat processing industry it is up to 15 percent. Against this backdrop, investments in the implementation of highly efficient CHP systems are as a rule amortised within two to six years.

However, the companies only remain competitive if they succeed in integrating more photovoltaic systems or biogas plants and cogeneration units into the operational power supply system longterm. Intelligent systems take care of the coordination between the generation, distribution, storage, and consumption of the decentrally produced power. The correlation between the energy turnaround and the fourth industrial revolution becomes apparent at the latest here, because the networked production in the smart factory also guarantees a higher transparency of the energy flows. This close coupling of the food production to the energy industry via intelligent power grids (smart grids) contributes to the energy turnaround that is not to be underestimated - and offers the company a significant saving potential. Thanks to the intelligent network control they can flexibly react to seasonal fluctuations in the demand and avoid expensive peak loads. Use of energy from the environment Industry 4.0 is proving to be a direct pacemaker for the energy turnaround at field level. More sensors are implemented for the continual monitoring of ramified production plants, which in turn don't need a battery since they send their data by radio transmission. They directly "harvest" the required energy from the

Agro & Food Processing July 2017

environment via energy harvesting. This means processes that transform the energy available on-site from temperature gradients, solar radiation, or mechanical movements into usable energy. An example here is the low energy sensor BlueTEG of the Fraunhofer Institute for Integrated Circuits IIS. It measures values such as the ambient temperature or acceleration rates and sends these to a tablet via Bluetooth. It uses the temperature difference between a source of heat and the environment to gain the electrical energy needed to power the electronics. In this way, autark, maintenancefree and wireless systems with almost unlimited standby times become reality. The areas of application include among others sensor networks for the monitoring of machines and plants (condition monitoring), tracking systems and sensors for building automation. The market of the energy harvesting systems is still in a very early phase, however the keyword will be present at the stands of many exhibitors from the automation section at the Cologne fair grounds. The basis for more energy efficiency From the field level through to the production planning - the implementation of an IT-supported energy management system according to DIN EN ISO 50001 is always the starting point for considerable savings. This enables food manufacturers to determine, document and continually improve the consumption of their plants. As scalable systems they can be integrated into the process control system at any time in the form of add-ons. Thus, in addition to the plants for the generation of energy and the sensors for monitoring the operating states, at Anuga FoodTec in Cologne the focus will also be on the corresponding software solutions. They are what initially enable the producers to sustainably improved processes, permanently increase efficiency and thus save costs as well as reduce the greenhouse gas emissions.

NEWS

Govt. shall provide financial assistance to food processing units in Goa

he Goa government has introduced a scheme under which the food processing units in the state will be given financial assistance up to Rs 30 lakh each to increase the processing capacity, reduce wastage and enhance the income of farmers. The state government notified the scheme titled ‘State Mission for Food Processing Scheme (SMFP) 2016’. The scheme envisages extending the financial assistance or incentives for the establishment of new food processing units as well as technology upgradation and expansion of existing food processing units. Goa Under Secretary (Industries) Georgina Saldanha said in the notification

notification. The main objectives of the scheme are to increase the level of processing, reduction of wastage, value addition, enhance the income of farmers as well as increase exports thereby resulting in overall development of food processing sector.

schemes, which could lead substantial participation of the state governments or Union Territories, it said.

“The scheme provides incentives to the food processing units in the form of financial assistance to the extent of 25 per cent of the cost of the plant and machinery and technical civil works, subject to a maximum of Rs 30 lakh, to be released in two equal instalments.”

However, the Centre has delinked the NMFP scheme from the central financial assistance and has left it to the states to decide to continue (or not) NMFP scheme out of the increased resources resulting from the recommendations of the 14th Finance Commission, the notification added.

The Ministry of Food Processing Industries (MoFPI) is implementing the National Mission of Food Processing (NMFP) with an objective to decentralise the implementation of the ministry’s

“As there is good scope for the development of food-based industries and generation of sustainable employment, the state government intends to continue the scheme,” Saldanha said in the

The food processing sectors like fruits and vegetables, dairy, meat, poultry or fish products, bakery products, cereal or other consumer food products, rice/flour/ pulse/oil milling and such other agri-horti sectors including food flavors, colours, oleoresins, spices, coconut, mushroom wines, and hops will be covered under the scheme, Saldanha said. The activities of aerated water, packaged drinking water and aerated drinks will not be considered for financial assistance under the scheme, it clarified. The government has constituted an internal screening committee and state level empowered committee to decide on the applications received under the scheme.

4 mega food parks to be operational and 300 new cold chain proposals received

n the next 3 months four mega food parks will become operational during the course of next three months.

sector, the industry should impart training to the farmer to take utmost care of quality of produce.

According to Union Minister of State for Food Processing Industries, Sadhvi Niranjan, the government sanctioned 63 cold chain projects since 2014, and about received 300 proposals for setting up new cold chain projects have been receive, which shows that industry across India is taking interest in food processing sector as we have received many applications from north-eastern states like Nagaland, Manipur and others.

Ministry of food processing has proposed to provide storage facilities for perishable products in the market itself like for wheat and rice, so that farmer can take it to the desired place later.

The government is working at a rapid pace for development of food processing

D.K. Singh, chairman, APEDA (Agricultural and Processed Food Products Export Development Authority) said that his organisation is working on horticulture sector to increase export basket and is trying to export and promote mangoes in a big way. When we think of a business plan in

logistics development we must also think those aspects which are relevant in a particular market, said Mr Singh highlighting that feedback received from Korea on export of mangoes was not good, in terms of quality, packaging and other related issues. D.K. Singh also regretted the fact that logistics for cold chain for import items is better than for the export items as those products have to be brought and quickly distributed to the consumers. That segment is well off and the industry is ready for a distribution network but not for exports and industry is not ready to work with farmers, said the APEDA chief.

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