Oil & Food Journal July'2012 Issue

India’s Only Monthly for Processed Food, Agro Commodities, Edible Oil & Allied Segments

Vol 7 Issue 9 July 2012

RNI NO:-MAHENG/2005/15987

India’s First E Magazine-Logon to www.advanceinfomedia.com

POSTAL No./MH/MR/THANE(W) 50/2010-2012

Food poisoning on rise

Supply Chain Management

Basic Concepts

Myth &

Canning

reality

Tomatoes

Organic vs non-organic : the facts

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OIL FOO D EDITOR Manzar Aftab Naqvi CONSULTING EDITOR Basma Hussain GROUP EDITOR Firoz H. Naqvi firoz@advanceinfomedia.com Mumbai Adil Abbas (Mrktg. Co-ordinator) adil@advanceinfomedia.com GRAPHICS DESIGNER Sameer sameer@advanceinfomedia.com CIRCULATION Seema Hayat Shaikh seema@advanceinfomedia.com Delhi Sayyed Shahnawaz +91-9871255423 GENERAL MANAGER Gyanendra Trivedi

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8

From the Desk of Editor

F

Dear Readers

ood processing a boom sector! Well it has been uttered thousands of times in our editorials and news items but this time this boom talk is not Indian, it's about our little neighbour Sri Lanka.

Sri Lanka is not only a tourist paradise but a wonderful land for best varieties of foods grown here in most organic manner anywhere in the world. I have interacted many people both Sri Lankan as well as foreigners on this topic and everybody has same words, Yes the quality of food is much better here! One of my friends in Sri Lanka a food processor from this country has been practically exporting very good quality tea from this country and an advocate of export potential of him mother land and his views are well accepted here. Sri Lanak is looking at the demands coming from its neigbouring countries as well potential importers of foods such as Persian Gulf countries.

“Pro Foods Pro Pack” provides a great opportunity to not only Sri Lankan food processors but also the global technology companies to understand the demand for their products. Indian machinery export has been one great example here. Indian technologies are well accepted not only due to their technical expertise but their behavior towards this country, culture and uncountable similarities between us, we are the most successful machinery suppliers at the moment in this country.

In the last few weeks we have been talking each other Where we gona stay? What we gona eat? And when we gona shop? Coz of us are going to attend Pro Foods Pro Pack 2012, Colombo, Sri Lanka, this July.

Sri Lanka was governed by western powers just the India. The country starting from the Portuguese to the Dutch and finally the British. One of the key introductions to the “agriculture” sector during this period was plantation agricultural crops, including tea, rubber, coffee, cashew etc. Before that, the economy was considered as “rural” and “subsistence agriculture-based”, where a vast majority of fellow citizens was involved with cultivation of paddy and other field crops that can be used in domestic consumption. Since the independence from the British rule in 1948 to date, the successive governments came into power have taken many steps to promote the activities pertaining to these two sub sectors (i.e. paddy / other field crop and plantation crop) in the areas of production, processing, and marketing.

Since the independence, alongside the food and agriculture sector, both “manufacturing” and “services” sectors have also expanded. However, the relative performance of each sector has been uneven, where the manufacturing and services sectors grow rapidly in compared to the food & agricultural sector. The most notable feature in this regard is the structural transformation1 where the manufacturing and services sectors make higher contributions to economic development, measured in terms of the Gross Domestic Product (GDP), than the agriculture sector (Central Bank of Sri Lanka, 2005; Sanderatne, 2005). At present, the manufacturing sector contributes about 26.5% of GDP in Sri Lanka, while agriculture, together with forestry and fishing sectors, contribute 17.9% of GDP. The historical data from the Central Bank of Sri Lanka Annual Reports (1951-2005) show that this is in sharp contrast to the structure of the economy existed just after the independence. In 1950, for example, the contribution of food and agriculture related activities to the GDP were nearly 41%, while that of manufacturing sector was accounted for about 16%. Combined with this process, the contribution of services sector were also rose from 41% in 1950 to 55.7% of GDP by 2005. In the beginning of 1950s, plantation crops not only contributed to a large share of agricultural output, but most of the manufacturing output and services also consisted of either processing of tea, rubber and coconut and/or supplementary or supportive of these crops.

Although the food & agriculture sector in Sri Lanka was able to contribute satisfactorily (although, not pleasingly) towards the economic development of the country in a number of key areas, including food security, capital formation, and agricultural trade, it emphasizes that there exist lots of “opportunities” and “urgent requirements” for further improvements in these areas.

Sri Lanka's processed food industry has been witnessing a growth rate of 15-20 % year on year and exports of processed foods also saw a marked increase during the last two years. Countries like Brazil, India and Cuba generate electricity using agricultural raw materials and this will also have detrimental effects on the global food security.

As far as local industry is concerned, local agriculture industry will have to go through a modern phase and prolific investments on agricultural research and development as well as machinery and factories are needed to further improve the industry's activities.

See you at Colombo!

Oil & Food Journal July 2012

-Editor

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Oil & Food Journal July 2012

Contents Contents 18

Canning Tomatoes

News

12

MoFPI to invest Rs 241 cr in abattoirs

12

NIFTEM launches orientation programmme

14

Amul plans to open 1,000 outlets this fiscal

14

Amul dairy products exports set to rise by 20 pc, says MD R S Sodhi

14

Mother Dairy in high-protein growth drive

15

Punjab trains youths to increase dairy products

15

Sahara India to enter dairy business

15

‘Strengthen livestock, dairy sectors to achieve 4% agri growth'

16

New antimicrobial for meat processing

17

India invites Brazilian investment in food processing sector

Most Reliable Packaging Solution Provider

24

Nichrome Increases Its Market Share In Export Markets YOY.

42

44

Hot food retail sector 41 gets government push Jagdishpur to have

57

UP's first mega food park 28

Myth

48

& reality Organic vs non-organic : the facts

36

Food poisoning on rise

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Oil & Food Journal July 2012

Supply Chain Management

Basic Concepts

r

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Oil & Food Journal July 2012

News

MoFPI

to invest Rs 241 cr

in abattoirs

T

he Union ministry of food processing industries (MoFPI) is focusing on schemes to scale up infrastructure projects for the food processing industry, and would invest around Rs 241 crore in setting up new abattoirs and modernising the existing ones, said a senior official from the Indian Council of Agricultural Research (ICAR).

At a conference on meat processing technologies organised by the Tamil Nadu Technology Development and Promotion Centre (TNDPC) of the Confederation of Indian Industry (CII), B S Prakash, assistant director general (AN&P), ICAR, said that the MoFPI would make investments to create a brand value for the Indian wholesome hygienic meat products and byproducts.

The ministry is initiating schemes to upgrade infrastructure for the food processing industry, and as part of this, would invest Rs 241 crore in setting up new abattoirs and upgrading the existing 12

Oil & Food Journal July 2012

ones. It would invite expressions of interest for the empanelment of zonewise project management for the scheme, he added. Even as the country has considerable livestock population, the export of meat and meat products is less than 3 per cent. The industry and academia should work together to reduce the challenges and enhance meat production in the country, he said.

Hyderabad-based National Research Centre on Meat (NRCM) has plans to collaborate with TNDPC to start training programmes for the entrepreneurs in the sector.

A K Srikanth, chief executive officer of Alchemist Foods (Private) Ltd, said that India produced around 6.5 million tonne of meat in 2010-11, which was around 2.2 per cent of the global meat production. However, only around 1.1 per cent of it is conv-erted into valueadded products like sausages, kababs and meat balls, while the world average is 70-72 per cent.

NIFTEM launches orientation programmme

T

he National Institute of Food Technology Entrepreneurship and Management (NIFTEM) recently launched the orientation programmme for BTech and MTech courses in the Capital.

Sushil Kumar, registrar, NIFTEM, said that the two courses offered by the institute will open up new horizons for science students in the country. Dr Manoj Kulshreshta, dean of academics outlined the career growth prospects for those interested in pursuing BTech and MTech courses at NIFTEM. The Institute has been established by the Government of India to harness the full potential of India's food processing sector. Similar programmes are being held all over the country between May 23 and June 15 when admissions to these courses will formally commence.

The Indian Sign Language Research and Training Centre (ISLRTC) organised a session titled 'Orientation to Deafness' at the University's Convention Centre recently.

Attended by BA in Applied Sign Language Studies (BAASLS) students and staff, the session aimed at increasing awareness about deafness, problems of the deaf community and initiatives necessary for solving them.

Professor M Aslam, Vice-Chancellor, IGNOU, said: “The moment we pick up how they talk to each other, they start communicating with us as well.” He informed the gathering that a committee had been constituted to construct a specialised building for the project at IGNOU. Terming the development of ISLRTC at the IGNOU campus a significant step, he said there still were many challenges to overcome.

Professor Avadhesh Kumar Singh, director, ISLRTC, emphasised on a systematic study of the issues and problems of the deaf community in India.

He felt that there was a lack of awareness among the people. “They don't need sympathy but empathy from all of us,” he added. The ISLRTC chief advisor Dr Madan Mohan Vasishta also shared his experience of going deaf at age 11 and how for a long time he was unaware of the existence of sign language.

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Food Processing Directory

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News

Amul plans to open 1,000 outlets this fiscal

T

he largest food brand in India currently has around 6,500 outlets selling various items, including dairy and frozen product.

Preparing to defend its turf from foreign competitors, Gujarat Cooperative Milk Marketing Federation that sells dairy products under the popular Amul brand, aims to open 1,000 more outlets across the country in the current fiscal.

Amul, the largest food brand in India with a turnover of Rs 11,668 crore in 2011-12, currently has around 6,500 outlets selling various items, including dairy and frozen products. "We plan to add another 1,000 outlets in the country in the current fiscal. We need to be prepared as FDI in (multi-brand) retail can happen anytime," Gujarat Cooperative Milk Marketing Federation (GCMMF) Managing Director R S Sodhi told.

Currently, Amul's main competition in segments like dairy whitener, baby food and condensed milk comes from Swiss major Nestle, while in frozen food category it plays against regional

players such like Vadilal and Kwality.

On the core milk segment, Mother Dairy is its main competitor.

The government had last year decided to allow up to 51 per cent FDI in multibrand retail but deferred its implementation due to political opposition.

Commenting on sales projection for this fiscal, Sodhi said the federation is aiming to touch Rs 14,400 crore in 2012-13.

Amul, which is also known for its advertisements based on topical events, said the campaign helps in keeping the Amul brand refreshed and young.

"The campaign has kept Amul brand contemporary, fresh and young," Sodhi said.

He added that unlike other FMCG firms which spent around 7-8 per cent of their turnover in advertising, the federation's spend on the marketing campaigns has been less than 1 per cent of the total turnover.

Formed in 1946, Amul is jointly owned by 3.03 million milk.

Mother Dairy in high-protein growth drive

A

scorching summer is good for dairy product makers. The capital's corporate milkman is betting on this for high growth.

Mother Dairy, the wholly owned subsidiary of the National Dairy Development Board (NDDB) with sales in excess of Rs. 5,200-crore, plans to double its dairy products turnover by the end of the fiscal year 2013-14, aided by ready-to-eat kheer and fruit yoghurt on which rival brands such as Amul and Danone have pushed ahead in the past one year.

“By 2013-14, dairy products will be Rs. 1,100 crore business for the company from Rs. 550 crore today. We plan to achieve this by adding capacities and expanding pan-India distribution and marketing,” Subhashis Basu, business 14

Oil & Food Journal July 2012

head, dairy products, Mother Dairy, told.

The dairy products division is growing at a 35% annual clip and 13 new ice cream derivatives are planned to keep up the momentum.

“With rise in incomes, the demand for protein intake will go up. We expect that huge demand will come from first-time consumers. I believe, this is the most exciting time in dairy products business,” Basu said.

In India, the per capita consumption of dairy products does not exceed 300 millilitres per annum, compares with Europe's 9 litres and US' 12 litres, say officials of Mother Dairy, which plans to fan into Kolkata and southern India next year.

Mumbai is the next stop.

Amul dairy products exports set to rise by 20 pc, says MD R S Sodhi

G

ujarat Cooperative Milk Marketing Federation, which sells dairy products under the popular brand Amul, expects to increase its exports by 20 per cent on the back of surging demand.

The federation is exporting products like butter, cheese, ghee and sri khand worth Rs 100 crore, at present.

"We are expecting to increase our export by 20 per cent soon," Gujarat Cooperative Milk Marketing Federation (GCMMF) Managing Director R S Sodhi told.

The Amul brand has significant presence in overseas markets such as Mauritius, the UAE, the US, Oman, Bangladesh, Australia, China, Singapore, Hong Kong and a few South African countries.

Sodhi said, "Though our focus is mainly on the domestic markets, we have to ship our products outside to cater mainly to the needs of Indians settled abroad".

Formed in 1946, Amul is jointly owned by 3.03 million milk producers in Gujarat.

Amul spurred the White Revolution in India which in turn made India the largest producer of milk and milk products in the world. It is also the world's largest vegetarian cheese brand.

Amul is the largest food brand in India and world's largest pouched milk brand with an annual turnover of USD 2.2 billion (201011).

It is selling milk and other products through 6500 outlets across the country.

The Dairy major had a turnover of Rs 11,668 crore in 2011-12 which it plans to enhance to Rs 14,400 crore in 2012-13 fiscal.

News Punjab trains youths to increase dairy products

A

tleast 90% of the milk produced in developed countries is processed for dairy products whereas this figure is just 14% in case of Punjab.

It was stated in a commercial training programme organized by Krishi Vigyan Kendra, which is affiliated with Punjab Agriculture University, Ludhiana, at Guniyana village of Muktsar district.

During the 10 days training programme, the participants especially rural youths were taught about balanced ration for different age groups of dairy cattle.

They were also told about care of animals in different seasons, timely vaccination to avoid infectious diseases and financial assistance from banks available for dairy farmers .

Twenty four trainees were awarded certificates after successful completion of the training course. Dr. NS Dhaliwal, deputy director, Krishi Vigyan Kendra, Sri Muktsar Sahib shared his views

about importance of dairy farming as a main occupation.

"It's a profitable venture as it complements agriculture in several ways and ensures good returns," he said.

An expert on the issue, Dr. Madhu Shelly, who conducted the programme, elaborated about huge potential of dairy farming in Punjab.

It was also stated in the training programme that Punjab houses only 3% of total milk producing animals of India, though, it still holds fourth position in milk production in the country.

Few months back, Punjab had imported 1.5 lakh high quality sex semen doses from Canada to improve the cow breed, thus creating new milestones in the production of milk. According to Gulzar Singh Ranike, state minister for animal husbandry and diary development, said that these imported sex semen would help 75,000 cows to produce dual breed offspring.

Sahara India to enter dairy business

S

ahara India Pariwar announced its decision to make a foray into dairy business from next year.

"We are going to make a foray into dairy business by opening the world's biggest dairy on April 1, 2013. We plan to produce 50 lakh tonnes of milk -- the largest in the country," Managing Worker and Chairman Sahara India Pariwar told reporters here.

He said pure milk would be made available to the public from his dairy and for this 9,000 acres would be acquired

15

Oil & Food Journal July 2012

near Muzaffarnagar in Uttar Pradesh besides land in Madhya Pradesh.

Asked why the company is not entering West Bengal in infrastructure business, Roy said there were a lot of political problems there.

"We faced a lot of legal hurdles in acquiring 175 acres of land in Kolkata", he said adding that in Siliguri and Kharagpur the company is likely to launch its projects soon.

About the group's experience in Uttar Pradesh in past five years of BSP rule, Roy said the company was in "back gear".

On problems being faced for development of townships, he said 4748 government sanctions were needed for a project. "Besides, environmental clearance is necessary. It takes about two years," he said and added that group had the biggest land bank in the country and expected three-four other companies to come up.

About plans to enter Delhi, Roy said it was planning a project near Dwarka and also in Greater Noida and Ghaziabad.

‘Strengthen livestock, dairy sectors to achieve 4% agri growth'

I

ndia can achieve four per cent growth in the agriculture sector, as envisaged in the 12th Five Year Plan, provided the livestock and dairy sectors are given enough incentives, said Mr Mark Kahn, Executive Director of Godrej Agrovet.

He was participating in a panel discussion on agriculture growth at the Indian Merchants' Chamber.

Mr Kahn said that currently, polices are heavily tilted in favour of dairies run by the cooperative sector. However, cooperative dairies have been successful in Gujarat and to a certain extent in Maharashtra and Karnataka. “But, in the rest of the country it has been an unmitigated disaster. Policy makers should pay attention to private dairies,� he said.

Under the National Dairy Plan, huge sums of money would be handed over to the cooperative dairies, neglecting private sector dairies like Nestle and others. These private dairies are developing the sector very well, as well as undertaking farm extension services, he said.

The National Dairy Development Board has rolled out an ambitious, 15-year-long National Dairy Plan, envisaging an outlay of Rs 17,300 crore.

Private initiative Mr Kahn pointed that private companies are best suited for developing the sector because they do maximum value addition in milk products, while cooperative sector dairy revenues are still driven by selling milk and they have not diversified their product portfolio.

He said that there was huge potential for growth in the livestock sector, which is almost 25 per cent of the agriculture sector. The sector is already growing at four per cent without any major help from the Centre or the State Governments. The poultry and inland fisheries sectors are also growing at six to eight per cent. There is a need for new investment in these sectors too, he said.

News

New antimicrobial

for

meat processing A

global developer, manufacturer and marketer of highly engineered specialty chemicals, announces the launch of a new antimicrobial used in meat processing, enhancing the company's food safety portfolio to include a liquid form of hypobromous acid.

C e l l Ve x ™ i s a p o s t - h a r v e s t antimicrobial proven effective against E. coli, Campylobacter and Salmonella for high volume applications in the meat and poultry markets. With the launch of CellVex, Albemarle can now offer customers two product platforms for hypobromous acid – solid and liquid.

CellVex can be used as part of a multiple intervention strategy and is approved in all applications within a meat processing plant.

"Albemarle is dedicated to providing antimicrobial interventions to reduce food-borne pathogens across the globe.

We offer unique products and sciencebased solutions for compliance with various global performance standards including the United States Department of Agriculture Food Safety and Inspection Service's Salmonella and Campylobacter initiative in poultry processing," stated Tina Craft, Global Business Manager, Specialty Bromides.

CellVex joins Albemarle's current food ® safety products, AviBrom and BoviBrom®, which are solid forms of hypobromous acid and sold through a partnership with Elanco Food Solutions.

Albemarle is the only company in the f o o d s a f e t y i n d u s t r y t o o ff e r

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Oil & Food Journal July 2012

hypobromous acid in a solid form.

AviBrom, an antimicrobial processing aid for poultry plants, was the first bromine chemistry solution introduced into meat processing. BoviBrom is a post-harvest antimicrobial rinse for beef processing. All three products are FDAapproved, are efficacious in reducing bacteria and can be applied in a variety of processing applications.

Albemarle utilized its new Research & Development Microbiology Laboratory in Baton Rouge at the Louisiana Business & Technology Center on the LSU South Campus Research Park for the development and testing of CellVex. This state of the art facility, fully staffed with research scientists, specializes in microbiology testing and is equipped to test all food-borne pathogens.

As Albemarle expands its product offering, the company is working with key public and private entities to solve global food safety challenges.

Albemarle's Food Safety business is a part of the company's Fine Chemistry global business unit and offers a premium line of bromine-based antimicrobials as a unique solution for t h e f o o d p r o c e s s i n g i n d u s t r y.

Albemarle's food safety products are some of the fastest growing products used in processing today, proven effective against many pathogenic bacteria such as Salmonella, Campylobacter,Listeria and E. coli.

About Albemarle Albemarle Corporation, headquartered in Baton Rouge, Louisiana, is a leading global developer, manufacturer, and

marketer of highly-engineered specialty chemicals for consumer electronics, petroleum refining, utilities, packaging, construction, automotive/transportation, pharmaceuticals, crop protection, foodsafety and custom chemistry services.

The Company is committed to global sustainability and is advancing its ecopractices and solutions in its three business segments, Polymer Solutions, Catalysts and Fine Chemistry. Corporate Responsibility Magazine selected Albemarle to its prestigious "100 Best Corporate Citizens" list for 2010 and 2011.

Albemarle employs approximately 4,000 people and serves customers in approximately 100 countries. Albemarle regularly posts information to www.albemarle.com, including notification of events, news, financial performance, investor presentations and webcasts, Regulation G reconciliations, SEC filings, and other information regarding the Company, its businesses and the markets we serve.

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding Albemarle Corporation's business that are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report on Form 10-K.

News India invites Brazilian investment in

food processing sector

M

inister of Commerce, Industry and Textiles, Anand Sharma, has invited the Brazilian investment in recently launched National Infrastructure and Manufacturing Special Economic Zone as well as in the food processing industries.

He did so in his dialogue with his counterpart Fernando Pimentel, Brazilian Minister of Development, Industry and Foreign Trade in Brasilia.

The Minister's visit to Brazil was in pursuance to the invitations extended to him by his counterpart Mr. Pimentel, and Mr. Antonio de Aguiar Patriota, Brazilian Foreign Minister.

Both sides agreed that infrastructure was one area in which lot of opportunities existed on both sides for the companies to participate in. During the recent state visit of Brazilian President Dilma Rousseff to India in March 2012, President herself had invited the Minister to visit Brazil for advancing the bilateral economic and commercial relations, as also to address the larger issue of making essential drugs available 17

Oil & Food Journal July 2012

at affordable prices to our population.

In this context, Minister Sharma has been accompanied by a pharma delegation of 15 top Indian companies coordinated by Pharmexil. During the Ministerial dialogue, both sides agreed that the establishment of a Working Group in the Pharmaceuticals and Life Sciences would be a welcome step towards furthering the cooperation between India and Brazil in this area.

Brazil expressed keen interest in collaboration with India in joint production of essential drugs for fighting HIV Aids, malaria, etc. Both sides stressed the importance of relaunching the India-Brazil CEOs Forum, a decision taken in the form of declaration at the Summit level in March 2012.

They also agreed that the proposed meeting of the two Co-chairs of CEOs Forum would be a positive step in taking this initiative forward. Indian side also sought for an early meeting of the existing Joint Working Group in Hydrocarbon sector to move this area of bilateral cooperation on faster track.

The cooperation in the plurilateral as well as multilateral context was also discussed during the Ministerial Dialogue and both sides expressed satisfaction at the increased level of our cooperation in this context.

A Memorandum of Understanding between the Council of Scientific and Industrial Research (CSIR), through National Physical Laboratory (NPL) and the National Institute of Metrology (INMETRO), Brazil was also signed for scientific and technological cooperation in chemistry, physics, engineering measurement sciences, development of certified reference materials for thermo physics properties,nanometrology, analysis of surface and thin films, biofuels, and biotechnology.

The purpose of this Memorandum is to provide a framework for the exchange of scientific and technological knowledge services and the enhancement of scientific and technical capabilities of the two sides in the areas of chemistry, physics, and engineering measurement sciences.

Tomato Processing

Canning Tomatoes

18

Oil & Food Journal July 2012

T

Introduction omatoes are the most widely home-canned product in the United States. Home canned tomatoes can be prepared in a readyto-use crushed format, or left whole or halved. Whole or halved tomatoes may be canned by covering with water or tomato juice; or, with no added juice. Crushed tomatoes must be hot packed. It is very important to match the preparation process you have selected with the correct processing times from either Tables 1 or 2.

General Instructions Selection — When canning, select only disease-free, preferably vineripened, firm fruit. Do not can tomatoes from dead or frost-killed vines. Unripened tomatoes are more acidic than ripened fruit and can be canned safely with any of the following recommendations. For best results process tomatoes within 2 to 3 hours after harvest or purchasing.

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Oil & Food Journal July 2012

Tomato Processing Canning whole cherry or grape tomatoes is not advised.

Acidification — Tomatoes have a pH

that for some tomato products, pressure processing will result in a more nutritious and higher quality canned

off some juice. Continue heating the tomatoes. Stir to prevent burning.

As soon as the tomatoes boil, gradually

Acid

Pint

Acid Bottled Lemon Juice

1 Tablespoon

2 Tablespoons

Citric

¼ Teaspoon

½ Teaspoon

Vinegar (5% Acidity)

2 Tablespoons

between 4 and 4.6. To ensure safe acidity of whole, crushed, or juiced tomatoes use the recommendations in the chart below. Acidification is required when pressure canning or boiling water bathing tomatoes.

Add acid directly to the jars before filling with tomatoes. If desired, add up to 1 tablespoon of sugar per quart to offset acidic taste. Vinegar may cause undesirable flavor changes.

Sodium — The use of salt is optional in all canned tomato products. Salt can be used for flavor or color protection.

Processing Even though both boiling water bath and pressure processing times are given (see Tables 1 and 2), recent research shows

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Oil & Food Journal July 2012

good. Recipes that specify pressure canning only may contain many low acid ingredients and can only be safely canned in a pressure canner at the specified pressure and time.

Crushed Tomatoes (no added liquid) About 22 pounds of tomatoes are needed per canner load of 7 quarts; 14 pounds are needed per canner load of 9 pints.

Wash tomatoes and dip in boiling water for 30 to 60 seconds or until skins split, then dip in cold water. Slip off skins and remove cores. Trim off any bruised or discolored portions and quarter.

In a large pot, quickly heat one-sixth of the tomato quarters. As tomatoes are added to the pot, crush them with a wooden mallet or spoon. This draws

Quart

4 Tablespoons add the remaining quartered tomatoes.

Stir constantly. The remaining tomatoes do not need to be crushed; they will soften with heating and stirring. Continue until all tomatoes are added. Boil gently for 5 minutes.

Add bottled lemon juice or citric acid to jars as listed in the acidification table. If desired, add 1 teaspoon of salt to each quart jar, or ½ teaspoon to each pint. Fill jars immediately with hot tomatoes.

Leave ½-inch headspace. Adjust lids and process jars as described in Tables 1 or 2.

Whole or Halved Tomatoes About 21 pounds of tomatoes are needed per canner load of 7 quarts; 13 pounds are needed per canner load of 9 pints.

Wash tomatoes. Dip in boiling water for

Tomato Processing

30 to 60 seconds or until skins split; then dip in cold water. Slip off skins and remove cores. Leave whole or halve.

Add bottled lemon juice or citric acid to jars as listed in the acidification table. If desired, add 1 teaspoon of salt per quart, or ½ teaspoon to each pint.

Packed in Water Hot pack — Add enough water to cover the tomatoes, and then boil gently for 5 minutes. Fill jars with hot tomatoes. Add hot cooking liquid to cover leaving ½inch headspace. Adjust lids and process jars as described in Tables 1 or 2.

Raw pack — Fill clean jars directly with raw peeled tomatoes. Add hot water to cover, leaving ½-inch headspace. Adjust lids and process jars as described in Tables 1 or 2.

Packed Raw without added liquid Fill jars with raw tomatoes, leaving ½inch headspace. Press tomatoes in the jars until spaces between them fill with 21

Oil & Food Journal July 2012

juice. Leave ½-inch headspace. Adjust lids and process jars as describe in Tables 1 or 2.

Packed in Tomato Juice Hot pack — Put tomatoes in a large saucepan and add enough tomato juice to completely cover them. Boil tomatoes and juice gently for 5 minutes. Fill jars with hot tomatoes, leaving ½-inch headspace. Add hot

tomato juice to the jars to cover the tomatoes, leaving ½-inch headspace.

Adjust lids and process jars as described in Tables 1 or 2 Raw pack— Heat tomato juice in a saucepan. Fill jars with raw tomatoes, leaving ½-inch headspace. Cover tomatoes in the jars with hot tomato juice, leaving ½-inch headspace.

Adjust lids and process jars as described in Tables 1 or 2.

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Interview

Most Reliable Packaging Solution Provider

Nichrome Increases Its Market Share In Export Markets YOY.

Nichrome India, India's most innovative and reputed packaging machinery company, believes that a True packaging solution is an optimum combination of Product to be packed, Packaging machine and Packing material. There have been many variants of packaging machines both for liquid as well as sold foods revolutionized the packaging market in India and abroad. Nichrome has become one of the most prominent brands in the global market. Mr R J Rayanade, AVP Sales & Marketing has briefed our group editor Mr Firoz H Naqvi about their achievements and present status in the global market especially in the neighbourhood.

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Interview What are the latest trends @ Nichrome for the packaging of liquid and dry edible items?

Nichrome has launched various new packaging machine solutions to the market to cater dynamic requirements of the market. In case of liquid products like milk Nichrome has launched its Ultra speed machine model Filpack Servo 10K to meet high end requirement of Mega dairies for packaging of pasteurized milk @ 10,000 packages/hour.

In case of edible oil Nichrome'sFilpack SMD series Double Head machine has been awarded prestigious Technology Innovation award for 2012 by IPMMI. Nichrome is launching its advanced version model Filpack Servo SMD at Southpack exhibition Hyderabad during July 2012.

In dry edible packaging solutions the High speed Snackpack machine introduced for potato chips, kurkure, confectionery & Namkeen items has widely been accepted by m a r k e t .

Nichrome has launched its Saltpack solution offering > 55 to 60 packs/min output surpassing market expectation on capacity front.

Nichrome offers Bagging machine suitable for UniquePenta Seal pack format coupled with Linear Intelligent weigher for Rice, Sugar, pulses & other grains. This Modern

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retail friendly differentiating solution has been widely appreciated by market.

How has been the response especially from the export market to your packaging machines?

Nichrome could export its HFFS solutions to Gulf countries recently & entered into new arena. The high speed Edible oil packaging machines are widely being accepted in SAARC countries. Being the most reliable packaging technology solution provider Indian company Nichrome is able to increase its market share in export markets year over year.

In recent times there has been a lot of activities of your company in the neighbouring countries such as Sri Lanka and Bangladesh, how do you see these markets for packaging companies like you?

Yes we could fetch sizeable business from these markets in recent times. We could provide solutions for major products like Tea, Milk powder & Atta etc. to name a few This is result of our ongoing efforts to improve market share in these countries thru Innovative solutions.

What kind of sales and service network you have for neighboring, Persian Gulf

and African Countries?

We are having local sales promotional agents backed with after sales service. We could conduct special training programs for Engineers of our agents in these countries which help in speedy service to our customers.

What are the major growth segments from food industry you see (Sugar, milk, edible oil, food grains, confectionery, bakery) for the growth of you company in the global market?

Most of the above food sectors mentioned by you are growth drivers for our machine business in global market. In addition we are targeting Pharma Personal care /cosmetics segments for our HFFS & Multilane machines offered to global market now.

Nichrome has been one of the most active Indian packaging company participates in almost all the major packaging and food technology exhibitions in the global arena.

What are the benefits you see from these exposures?

The Food Technology exhibitions are providing platform to offer our Technologies to the prospects & update our present customers aware of Innovations & new solutions available for them from growing product basket.

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Organic Vs Non Organic

Myth

&

reality Organic vs non-organic : the facts

I

n business, your success can be measured by the number of imitators you have, multiplied by the number of detractors. The veterans of organic food – both the campaigners and the producers – are clearly achieving the greatest success of a generation. Their imitators and followers are swelling their numbers daily. Their critics have never been more vociferous. It is easy to see why.

Between 1990 and 2000 the organic market in Europe grew at average of 25 per cent a year to reach an annual turnover of £6 billion by April 2000.

Growth within the UK has been particularly strong in recent years with a five-fold increase in market value in only 5 years. There is a growing shift in consumer purchasing towards organic food.

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Organic Vs Non Organic This trend has developed for a number of reasons : Loss of trust in non-organic food products after a long line of food scares.

Desire to avoid pesticide residues in food.

Desire to eat food produced without the use of Genetically Modified Organisms (GMOs).

Demand for the highest possible standards of animal welfare.

Demand for environmental protection and enhancement.

Desire to protect the environment from GMO contamination.

Confidence in the external inspection programme and legal standards for production covering all organic production and processing.

Health and safety of farm and food workers worldwide.

Policy makers have recognised the potential for organic farming as a means of food production that meets the demands of nature and the marketplace. The benefits of organic management are reflected by government support for conversion, and post-conversion organic management, in all European countries except the UK. However, the progress and objectives of organic farming have not been welcomed by all. Organic production aims to avoid external inputs in order to

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achieve sustainability. This conflicts with non-organic agriculture which relies heavily on external inputs to increase yields (particularly pesticides and fertilisers). As a consequence pesticide sales globally are now estimated to be worth over ÂŁ15 billion a year.

There is clearly a strong commercial interest in maintaining this market.

It is therefore no surprise that organic farming has its critics, who are attempting to influence the buying habits of consumers with anti-organic allegations. It is important that these allegations or myths are engaged and refuted rather than ignored and allowed to gain credibility. The myth and reality initiative was launched by the Soil Association and Sustain to

gaps in current research on organic food and farming. These need to be urgently filled. However, emerging research is already beginning to show the benefits of organic production. The results of a major sixyear study recently reviewed in Nature magazine comparing organic, integrated and conventional apple systems revealed that an organic apple production system has similar yields to conventional and integrated production methods. Importantly, it also has higher soil quality, is better for the environment, produces sweeter and less tart apples, has higher profitability, and achieves greater economic sustainability.

We are confident that more research will yield more evidence that organic food and farming is good for

Food quality and healt 'There is no evidence available at present to be able to say that organic foods are significantly different in terms of their safety and nutritional content to those produced by conventional farming'Professor Sir John Krebs, Chair, UK Food Standards Agency, 2000 provide a well referenced and robust response to these myths. This report aims to educate critics, provide information for the organic sector and the media, and to raise awareness amongst the general public.

Our work has highlighted significant

people and good for the planet. *oil Association, Organic Food and Farming report 2000, March 2001 *United Nations, Food and Agriculture Organisation web site, www.fao.org.agp/agpp/ipm/issues.htm *John P Reganold, JD Glover, P K

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Mrganic O yths & Vs Food Non Organic Anrews and H R Hinman, Sustainability of three apple production systems, Nature, Vol 410, 19 April 2001.

Food quality and healt Organic food has: Lower levels of contaminants, such as pesticides, antibiotics and nitrates.

Higher levels of a variety of essential nutrients.

The UK Food Standards Agency has stated there is no difference between nonorganic and organic food.

However the Agency may have overlooked a study which reviewed 150 research projects comparing organic and non-organic food.

This study confirmed that, despite varied research methods, there is a trend towards fewer undesirable components or contaminants, and higher desirable components (such as vitamins) in organic food compared with non-organic food.

Pesticide residues The latest annual report on pesticide residues in the UK showed that about half the fresh fruit and vegetable samples tested contained pesticide residues.

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Safety has only been established for individual pesticides in certain circumstances. The long-term effects of pesticide residues and the implications of 'cocktail effects' on human health have not been established. The Food Standards Agency states that 'pesticide residues should be as low as is reasonably practical'.

Pesticide residues may reduce the fertility of humans and animals and the health of their offspring, as well as disrupting the chemical communication systems that regulate the reproductive cycle. A 17-year study carried out at the University of Denmark

that by peeling the skin of fruit and vegetables they can reduce their consumption of pesticide residues.

Although pesticide residues are occasionally found in organic food (largely as a result of pesticide spray drift from neighbouring farms), a diet based on organically produced food can significantly reduce the amounts of pesticide consumed and consequently any damaging effects of these chemicals. A growing body of scientific evidence implicates certain pesticide groups in a range of damaging health effects. For example, 45 pesticides are known or suspected hormone

'It has been demonstrated that organically produced foods have lower levels of pesticide and veterinary drug residues and, in many cases, lower nitrate contents' UN Food and Agriculture Organisation, 2000 has shown that women with higher than average levels of pesticides such as dieldrin in their bloodstream have double the risk of breast cancer.

Dieldrin is an organochlorine pesticide which is now banned for use in the UK but which, as with many other pesticides, persists for many years in the environment and in animal tissues.

The UK government advises consumers

disrupters.

These compounds have been found to affect reproduction and the immune system in fish, alligators, seals, birds and snails. There is increasing concern over the effects of exposure of pregnant women to these chemicals. The Royal Society states 'It is prudent to minimise exposure of humans, especially pregnant women, to endocrine disrupting chemicals.'

Organic Vs Non Organic Antibiotics Antibiotics are an essential element of modern medicine, and are used to reduce the chance of potentially fatal infections even in routine operations.

In the UK, the House of Lords select committee on science and technology report in 1998 on antibiotic resistance concluded that the use of antibiotics in animal feed for growth promotion should be banned. The report indicated that 'there is a continuing threat to human health from the imprudent use of antibiotics in animals', and that 'we may face the dire prospect of revisiting the pre-antibiotic era. Misuse and overuse of antibiotics are now threatening to undo all their early promises and success in curing disease'.

Despite the findings of the House of Lords, it has been common for antibiotics to be used as growth stimulators and for disease suppression by their routine addition to the feed of non-organic livestock. This regular use of antibiotics encourages the emergence of antibiotic-resistant organisms that pass to humans, via the meat. This results in some cases of salmonella, and other microbiological diseases being untreatable by antibiotics.

In 1998 the House of Commons agriculture committee recommended tighter restrictions on their use for prophylactic purposes.

Under organic farming standards antibiotic usage is restricted to the treatment of illness. Disease is minimised by practising good animal husbandry and avoiding dense stocking levels.

Organically produced foods have lower levels of antibiotic drug residues.

Food quality and health Nitrates A number of studies show that when nitrates, a common element of artificial fertilisers, are converted to nitrosamines they may be carcinogenic.

The nitrate content of organically grown crops is significantly lower than in conventionally grown products.

Nutritionally desirable components Several studies have found that organic

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food contained more nutrients than conventional food, with higher levels of various minerals and vitamin C. A 12-year German study found that organic food contains higher levels of minerals. The largest differences were for potassium and iron, but magnesium, calcium, phosphorus and vitamin C levels were also higher in organic vegetables.

An American study found that organically grown food contained much higher average levels of minerals than non-organic food. For example, there was 63 per cent more calcium, 73 per cent more iron, 125 per cent more potassium and 60 per cent more zinc in the organically produced foods. There was also 29 per cent less of the toxic element mercury. Several studies have found more dry matter (less water) in organically produced food than in non-organicanally grown produce.

This means that there are more nutrients per unit weight of food.

A UK MAFF shopping basket study revealed significantly higher levels of dry matter content in organic apples and carrots as well as more vitamins and potassium in other fruits and vegetables Both organic and non-organic production will be affected by the selection of more nutritious varieties instead of selecting the ones with the highest yields,

and by shorter food chains with less nutrient loss during transport and storage.

But do these differences make a significant contribution to health?

Animal feeding trials may provide the answer to this question, and a recent review of 14 studies confirmed significant health benefits from organic diets, especially in the areas of reproduction, early development, recovery from illness and overall health.

It is important to note that these animal feeding studies were not peer reviewed and deserve to be replicated given the significance of their findings.

More research is needed to understand fully the effects of the difference in nutrients in organically produced food and non-organically produced food.

Few long-term research studies have been done, as research into organic farming is under-funded internationally. In the UK for example, just 1.8 per cent(ÂŁ2 million) of MAFF's research and development budget for 2000 has been allocated for organic research, while the remaining 98.2 per cent is used for research on non-organic agriculture, including ÂŁ26 million, equivalent to 24 per cent of the budget, for genetic engineering and biotechnology.

The Soil Association is currently preparing a major report: Organic Farming, Food Quality and Human Health, for publication later in 2001.

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Food Poisoning

Food poisoning on rise

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his organic food was probably fertilised with animal manure containing dangerous pathogens.

Be especially worried about the virulent E. coli O157:H7, found mainly in cattle manure' D Avery, 2000 'It can be concluded that organic farming potentially reduces the risk of E.coli infection' UN Food and Agriculture Organisation, 2000 Food poisoning The evidence shows: Food poisoning rates have increased across the world for two decades.

There is no more risk of pathogen contamination of organic food than nonorganic food; Indeed many organic practices reduce risk.

Food poisoning cases have been increasing in the UK and in Europe at an alarming rate. Total cases in the UK have risen from 10,000 in 1982 to almost

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Food Poisoning 50,000 cases notified in England and Wales by the end of the 1990s, an increase of 400 per cent.

All types of food poisoning are increasing, including cases of salmonella and campylobacter. In the European Union in 1998 there were 188,000 reported cases of the former and 130,000 of the latter. These figures, moreover, were held to 'hugely underestimate the true extent of these diseases'. But the bacteria that has caused the most controversy for organic food, and has been linked to organic farming by the free-market think tank, the Hudson Institute in the US, is E.coli.

E.coli bacteria are found everywhere – in cups of tea, on our hands, in the air and in our intestines. Most of the E.coli varieties are harmless, but types of E.coli called VTEC (Verocytotoxinproducing E.coli) produce potent toxins and can cause severe disease and even death in humans. The commonest VTEC strain is O157.

It is thought that the misuse of antibiotics in modern agriculture and medicine led to the rapid development from the 1970s and 80s of more aggressive strains of E.coli that are immune to therapeutic drugs.

The most common cause of E.coli 0157 infection for humans is eating contaminated foods, particularly inadequately cooked minced beef (often in the form of beef burgers) and milk.

The US Center for Disease Control (CDC) 'identifies the main source for human infection with E.coli as meat contaminated during slaughter'.

'If you took meticulous time with every single carcass to vigorously clean it, scrub it, and wash it down, you could probably eliminate it, [E.coli].' R Elder, USDA Meat Animal Research Center, 1999.

But how are the foods contaminated with the bacteria in the first place?

Critics of organic farming assert that because organic farmers use farmyard manure there is a greater risk of pathogen contamination on organic crops. However, manure is also used widely in non-organic agriculture, with 80 million tonnes applied in the UK each year.Furthermore there are no

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restrictions on the treatment and application of manures by non-organic farmers.

Cases of E.coli 0157 wrongly associated with organic farming The supermarket chain Tesco removed organic mushrooms from their stores in May 2000 as a result of a test that showed 'possible presence of E.coli 0157.'

Five days later the Public Health Laboratory Service (PHLS) admitted that there had been an error in the laboratory testing of the mushrooms and the contamination had probably been caused by the laboratory. The PHLS stated 'there is absolutely no risk to public health from this incident'. In the United States forty-seven people reported food poisoning from a batch of Californian organic lettuces. In fact, the source of the contamination was not the lettuces themselves, nor any manure used to produce them, but the water supplied to the packing house. The water had been contaminated by a pen of non-organic cattle next to the site.

A survey conducted by the PHLS of over 3,000 ready-to-eat organic vegetables found no evidence of dangerous microbes that might cause desease in humans, 'indicating that overall agricultural, hygeine, harvesting and production practices were good'.

Minimising risk from manure Organic food must meet all quality and safety standards that apply to nonorganically produced food. But the standards for manure and soil health in organic farming go much further than the MAFF codes of good agricultural practice.

The UK Food Standards Agency recognises that there are likely to be lower levels of pathogens (harmful organisms) in manure used on organic farms: Food poisoning Four factors influence the potential transfer of pathogens from manure to humans: Pathogen levels in animal faeces.

Treatment, storage and processing of

manure.

The biological activity of the soil to which the manure is applied.

The timing of manure application in the crop rotation (the interval between application and harvest).

We will look at each of these four factors in turn.

Pathogens in manure To reduce the level of pathogens in animal faeces it is important to optimise animal health.

Organic systems do this by allowing access to pasture at all times in the grazing season, preventing overstocking and allowing animals constant access to water. Organic systems also prohibit the routine use of antibiotics.

This allows animals to build up natural immunity and makes them less prone to re-infection from pathogens such as E.coli.

In addition, a grass, rather than a grainbased diet, results in less E.coli bacteria in a cow's gut.

Organic farming standards state that a minimum 60 per cent of all feed for ruminants (cattle and sheep) has to be grass, hay or silage ('forage'). In contrast, ruminants in non-organic farming are fed a higher proportion of grain to increase production potential, as no limits apply.

Treatment of manure Organic standards require composting or other treatment of manure of nonorganic origin to optimise fertility and kill off pathogens, pests, or antibiotic residues. Composting is defined as a process of aerobic fermentation which involves a substantial temperature increase.

After an initial heating the compost heap must be turned, preferably covered and maintained for at least three months.

This greatly reduces pathogen levels in manure.For non-organic manure to be brought into an organic farm, permission must be granted by the organic certification body. Manure from intensive rearing units and human sewage sludge is not permitted under any circumstances in organic systems.

Both are allowed in non-organic farming.

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Food Poisoning

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Biological activity of the soil A biologically active (living) soil reduces the risks of harmful organisms in manure surviving and being transferred to humans. Pathogens will not thrive if there is strong competition from other soil-borne organisms.

Several research studies have shown that biological activity is higher in organically managed soil, leading to less persistence of harmful microorganisms. A 21-year-study at the Swiss R e s e a r c h I n s t i t u t e o f O rg a n i c Agriculture (FiBL) found that biological processes in the soil were improved under organic management and, conversely, that mineral fertilizers used in non-organic farming systems actually decrease biological activity in the soil.

Manure application in crop rotation As an extra safety measure new guidelines are being introduced with the 40

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Soil Association standards giving time intervals between application of manures and harvesting of crops.

Mycotoxins Certain moulds of fungi can produce poisons (mycotoxins) which are harmful to humans and animals.

Some claims have been made linking mycotoxins to organic foods, yet the UK Food Standards Agency has noted that evidence does not support this link.

There is no evidence to suggest that consumption of organic foods has caused mycotoxin poisoning in humans.

Mycotoxins can affect both non-organic and organic crops and further research is required to determine how they can be prevented. Preliminary work suggests that some agronomic strategies used in organic agriculture could lead to less fungal contamination: long crop rotations which avoid the accumulation of crop-species-specific mould, and

lower nitrogen application rates which decrease the likelihood of fungal pathogens on crops.

Furthermore there is evidence that farming systems which do not till the earth between crops, and which use fungicides to reduce fungal spores in the soil, serve to increase toxin production in cereals.

I n o rg a n i c s y s t e m s , t i l l i n g i s indispensable as a weed control technique and the use of fungicides is prohibited.

Therefore, organically grown cereals may be less prone to mycotoxin contamination prior to harvest than nonorganically grown grains.

Conclusion Organic farming practices reduce the risk of pathogens such as E.coli in food as well as potentially reducing the risk of mycotoxin contamination.

News

Hot food retail sector gets government push

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iding high on the huge opportunity in a “sunrise” s e c t o r, f o o d r e t a i l , t h e government is looking to set high benchmarks by releasing three new standards to bring such stores on a par with their global counterparts. The sector, currently estimated at Rs. 3.1 lakh crore, is growing 30% .

Considering such a big growth and its direct impact on the consumer, the national standards body — Bureau of Indian Standards (BIS) — has come up with three standards for the growing food retail sector in terms of management, hygiene practices and processing of food.

The three standards to be launched soon include IS 16019:2012 for basic requirements in food retailing, IS 16020:2012 for good hygiene and food

safety management, and IS 16021:2012 for good manufacturing practices in food processing.

“Since Indian food retail is a burgeoning sector and directly impacts consumers, BIS has come up with three standards to ensure quality and best practices on a par with global standards,” a senior official at BIS told.

“Though it won't be mandatory at present, the government is considering a proposal to compulsorily implement the standards in due course to ensure uniform quality in food retail across India,” he added.

With the emergence of the new urban middle class and changing consumer habits, food and grocery has emerged as the second-largest segment of the retail industry. India is among the world's major food producers and ranks as the

largest in production of livestock, milk and cereals, the second-largest in fruits and vegetable products, and among the top five in rice, wheat, groundnuts, tea, coffee, tobacco, spices, sugar and oilseeds.

“The Indian Standards on food retail management and good manufacturing practices will go a long way in the development of both the food retail and processing sector in India,” Arbind Kumar, director-general, FICCI, told.

“If FDI (foreign direct investment) in multi-brand retail sector is allowed, foreign retailers with expertise will bring in best practices in manufacturing, processing and distribution in India, thereby enhancing the objective for having the Indian Standards,” he added.

India Will Be World's Largest Beef Exporter in 2012

w

ith large lots also comes increased carrying costs. Carrying costs come from the cost to store, handle, and insure the inventory. Managers face the trade-off between the reduced cost of ordering and better prices offered by purchasing product in large lots and the increased carrying cost of the cycle inventory that comes with purchasing in large lots.

2. Safety Inventory—Inventory that is held as a buffer against uncertainty.

If demand forecasting could be done with perfect accuracy, then the only inventory that would be needed would be cycle inventory.

But since every forecast has some degree of uncertainty in it, we cover that uncertainty to a greater or lesser degree by holding additional inventory in case demand is suddenly greater than anticipated. The tradeoff here is to weigh the costs of carrying extra inventory against the costs of losing sales due to insufficient inventory.

3. Seasonal Inventory—This is inventory that is built up in anticipation of predictable increases in demand that occur at certain times of the year. For example, it is predictable that demand for anti-freeze will increase in the winter. If a company that makes anti-freeze has a fixed production rate that is expensive to change, then it will try to

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manufacture product at a steady rate all year long and build up inventory during periods of low demand to cover for periods of high demand that will exceed its production rate.

The alternative to building up seasonal inventory is to invest in flexible manufacturing facilities that can quickly change their rate of production of different products to respond to increases in demand.

In this case, the trade-off is between the cost of carrying seasonal inventory and the cost of having moremflexible production capabilities.

Location Location refers to the geographical siting of supply chain facilities. It also includes the decisions related to which activities should be performed in each facility. The responsiveness versus efficiency trade-off here is the decision whether to centralize activities in fewer locations to gain economies of scale and efficiency, or to decentralize activities in many locations close to customers and suppliers in order for operations to be more responsive. When making location decisions, managers need to consider a range of factors that relate to a given location including the cost of facilities, the cost of labor, skills available in the

workforce, infrastructure conditions, taxes and tariffs, and proximity to suppliers and customers.

Location decisions tend to be very strategic decisions because they commit large amounts of money to long-term plans.

Location decisions have strong impacts on the cost and performance characteristics of a supply chain. Once the size, number, and location of facilities is determined, that also defines the number of possible paths through which products can flow on the way to the final customer.

Location decisions reflect a company's basic strategy for building and delivering its products to market.

Transportation This refers to the movement of everything from raw material to finished goods between different facilities in a supply chain. In transportation the trade-off between responsiveness and efficiency is manifested in the choice of transport mode. Fast modes of transport such as airplanes are very responsive but also more costly. Slower modes such as ship and rail are very cost efficient but not as responsive. Since transportation

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News

McCain hopes breakfast item will thaw India's resistance to

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ith her family waiting for breakfast, Sanjukta Majumdar reaches into her f r e e z e r, p u l l s o u t a p a c k e t emblazoned with the black and yellow logo of her favourite food brand and clatters a half-dozen frozenidli onto a plate. She pops the discs of lentil and rice flour into the microwave, tears open the accompanying packet of sambar paste, adds a bit of water and, in moments, delivers a steaming, nutritious breakfast – the family favourite – to her husband and two sons. She has a bite and, in her simple assessment, reveals the heart of the strategy a Canadian food giant is using to conquer South Asia's kitchens.

“It's even better than the ones I could make myself,” Ms. Majumdar says of her frozen idli – made and sold by McCain Foods (India) Pvt. Ltd., the Indian branch of the New Brunswick-based food-processing giant.

The little white idli is a clever gamble by McCain, an attempt to carve out a place for its frozen-food products in a market where the company has no natural foothold.

McCain came to India more than a decade ago, first focusing on agricultural research and then entering the nascent fast-food market with its ubiquitous French fries.

Frozen food was a brand new field as well, but the company cautiously introduced some of its most popular international snacks, such as cheese and jalapeno nuggets. McCain, which is privately held, does not release sales figures, but the rapid rate of expansion would suggest they are solid.

Rapid social changes in India – a huge growth in people living in nuclear rather than extended families; more households with two adults working; less comfort with live-in domestic help; plus more aspirational desire for packaged and processed foods – make this a market with huge potential. Consumer analysts say it is now about 300 million people strong.

But this market also presents giant challenges: People are unfamiliar with, and thus often suspicious of, frozen food; there are huge logistical hurdles in manufacturing and a near-total absence of a reliable

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frozen food

temperature-controlled supply chain.

Nevertheless, India's Ministry of Food Processing Industry estimated in 2011 that the frozen-food sector is growing by 14 per cent a year. This country, it says, is the last great frontier in frozen foods.

“Per capita annual consumption of frozen foods even in an underdeveloped market like China is just about 3.5 kilograms and the total market size is $14.4-billion, i.e. roughly 400 times larger than India's market,” the ministry said in a statement last year. In Britain, it is about 34 kilograms, with $60 spent per person a year; in India, currently, it is three cents a year.

“For frozen food, you have to break a lot of barriers,” said K.S. Narayanan, who was until a few months ago managing director of McCain India. (The company declined to make any of its current staff available for an interview, saying communications staff were busy “for a month.”)

“You need to go with food [Indians]are comfortable with,” Mr. Narayanan said.

“Could I have done it only with French fries?

No.” The company set out to woo dubious Indians using local delicacies. First, in 2008, came the aloo tikki – a small fried disc made of potatoes, not unlike a hash-brown patty, often served from street carts and school canteens. The tikki caught on quickly but because people were used to buying them ready-made, it didn't represent a real mindset shift.

Then, Mr. Narayanan explained, close analysis of Indian eating habits revealed that the idli was a top-three breakfast food not just in the south, to which it is indigenous, but in all parts of the country. "We zeroed in on idli.

It's not messy, it's easy to make, we can do it.

It's known as healthy, it's just protein and carbohydrate.”

McCain perfected a freezable idli, but then had to get people to try it.

“People's instant reaction, if you tell them it is frozen, is, 'It cannot be done, it will be bad, it cannot be tasty, it is too old,' ” Mr. Narayanan said. So the company fanned agents out to small retail stores across the

country (large supermarkets are rare here, kept out by government restrictions), equipped them with microwaves and had them popping idli into the mouth of any customer who would stand still long enough.

The secret, Mr. Narayanan said, lies in the way they are made. When grandmothers made idli, they prepared the rice and fermented lentils on a stone grinder – a process that created heat from friction and trapped air in the mix, making for a light, fluffy patty. When people do it at home today, they usually use a small electric grinder, the go-to appliance in most Indian kitchens with electricity. That produces a heavier idli.

McCain built industrial processors that mimicked grandma – and a breakfast closer to hers.

After they launched the idli last year, McCain found that not everyone knew what to do with them – which prompted the company to add sambar (a lentil vegetable broth) and sell it all in a combo pack.Sambar, Mr. Narayanan added, was tricky. It's served as a runny liquid, hard to package – and good plastic packaging is hard to find, and expensive, in India. “So a chef made us a concentrate and then we said in the instructions to add water at home – and that also gives the housewife some level of activity which gives her satisfaction of having made it.”

Ms. Majumdar said she likes it, in fact, because there is almost nothing for her to do – she runs a paper-products business, her husband doesn't cook, her children are busy, so making her own idli was a hassle she is happy to skip. The price is nice, too – 60 rupees, or a bit over a dollar, for the six-pack with sambar.

Not everyone, however, shares Ms. Majumdar's enthusiasm.

“Most people who try them say they're only acceptable if you dunk them in sambar,” said Vir Sanghvi, who writes “Brunch,” India's most widely read food column, in the Hindustan Times. He thinks McCain should have stuck with its tikki, which he praised in his column as startlingly good. “ Idli is ambitious – it's a step too far.”

Fortification

A

vast amount of research is dedicated to the field of children's health and nutrition, with a majority of it devoted to gaining a better understanding of the health requirements and nutritional needs of the developing child. Meeting those needs will ensure the healthy, physical, social, and emotional development of today's young children and tomorrow's adults.

From zero to 60 months (newborn through five years old) are when the crucial nutritional building blocks are put into place that impact a child's body, heart and mind. Understanding the right nutrients and combination of nutrients, that are needed to affect proper development is important to creating a nutritional plan that optimizes a child's health and well-being.

Pregnancy Prior to the birth of the baby, moms can take steps to ensure the child has a solid nutritional start. Clearly, a healthy mom has the best chance of having a healthy baby. Mothers-to-be need to get regular checkups and follow their 44

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Fortification developing fetus, especially during the last trimester of pregnancy.

obstetrician's advice to ensure a safe and healthy pregnancy. As part of this plan, it is important to consume the appropriate amount of nutrients and energy needed to keep both mother and developing baby healthy.

That means that pregnancy is not the time to be thinking about restricting your energy intake to either restrict the weight gain normally a s s o c i a t e d w i t h p r e g n a n c y, o r attempting to lose weight. On average, a pregnant mother will need about 300 kcal extra, each day, to meet the energy needs of the growing child. While it is important to make sure that the mother is eating a balanced diet that is rich in micronutrients, it is especially important that all women of reproductive age ensure that they consume the Recommended Daily Intake (RDI) of 400 Âľg of the B vitamin folate.

Adequate folate (folic acid) intake has been shown to reduce the risk of certain birth defects, such as spina bifida. It is likely that an obstetrician will also recommend that a pregnant woman take a prenatal supplement to cover her increased micronutrient needs during pregnancy, including iron, calcium, and other essential micronutrients. Certain fatty acids are also important, such as DHA (docosahexaenoic acid), which accumulates in the brain and eyes of the

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Newborn Once the healthy baby is born, the best way to keep the baby healthy is by providing breast milk for the first four to six months.

B u t , supplements for the baby are a l s o recommended at this time.

According to the American Academy of Pediatrics and Center for Disease Control, moms that breast feed should also give their babies a vitamin D supplement (400 IU daily) to assure

muscles in the head, neck and trunk indicate that the baby is ready for a transition to solid foods. The initiation of solid foods should begin with the use of iron-fortified infant cereal diluted at first to a thin consistency with breast milk or infant formula and gradually increasing the thickness of the cereal gruel as the baby's control of the food in its mouth develops.

Introduction of finger foods are typically begun between six to eight months, after the baby has mastered cereals, strained fruits and vegetables. Attention needs to be paid to nutrients that support overall development, as well as cognitive function and development. The most important period of development of the central nervous system begins before birth and continues until a child is three years old. During this period thousands of neuron connections are formed; 70 percent of the brain develops during the fetal stage and the remaining 30 percent during the preschool period.

The nutrients that scientific studies have shown that are most critical for overall

Specific Nutrients Key to Brain Development and Cognitive Function2 Protein Iron Selenium Energy Zinc Vitamin A Certain Fatty Acids Copper Folate Iodine Choline adequate vitamin D status.Although breast milk is best, if mom cannot or chooses not to breastfeed, then infant formulas are a safe and nutritionally adequate alternative for the growing infant. Regardless of whether the baby is fed with breast milk or infant formula, frequent small feedings will be the rule, and as the baby grows the amount consumed at each feeding will increase and the number of feedings per day will naturally decline. It is important to monitor a child's growth and development by getting regular medical checkups.

Transition to Solid Foods Usually around four to six months of age, certain developmental milestones related to the control of voluntary

brain development, as well as those specific to cognitive development, are shown in the table below.

Toddlers (age one to three years) Toddlers often develop a sharp decline in their appetite after their first birthday.

You might notice that the baby is beginning to become a “picky-eater� or will turn their head away after a few bites

Fortification of food. Don't be alarmed. The baby's growth rate has declined and he does not require as much food. Babies grow at a rapid pace — three inches or so every three months. A toddler, in contrast, grows at a much slower rate — only three to five inches in an entire year.

A one year-old only needs about 1000 kcal per day to meet their energy needs, but the food needs to be highly nutritious. A baby will eat when hungry and having high-nutrient dense foods available will lead to ultimate feeding success and a healthy child in the long run.

At one year of age, whole full-fat milk can be introduced into the baby's diet.

The baby will need the same basic food groups as the rest of the family; meat, fish, poultry, eggs, dairy products, fruits and vegetables, cereal, grains, potatoes, rice, breads and pasta.

Don't neglect the oily fish, like salmon and mackerel, because they are important sources of long-chain omega 3 fatty acids, such as DHA and EPA (eicosapentaenoic acid), which are needed for proper brain, vision and cognitive development in young children.

However, if there are concerns about getting sufficient amounts of DHA and EPA fatty acids in the child's diet during this period of time; consider using a “growing up” milk to supplement the baby's diet. Growing up milk is a milkbased formula that is designed for children at least one year of age and is fortified with micronutrients and important longchain fatty acids, as well as being an excellent source of protein.

It is specifically made to meet the nutritional concerns of the one to three year old child. Remember that babies and young toddlers need more fat (about half their caloric intake) than older children and adults, so don't start worrying about fat intake yet and try to keep the fat calories appropriately high at least until age two.Then begin to transition to a lower portion of calories coming from fat, for example by transitioning to a lower fat content in milk.

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Meeting Micronutrient Needs According to a recent report that examined dietary intake in US infants, toddlers and preschoolers in a crosssectional survey of a national random sample of US children from birth to 47 months (FITS 2008 Study), 25% of toddlers and 40% of preschoolers took multivitamin/mineral supplements.

However, 63% of toddlers (12 to 23 months old) and 37% of preschoolers (24 to 47 months old) still failed to meet the Estimated Average Requirement (EAR) for vitamin E of 5 mg per day.

The EAR is the average requirement, meaning that only 50% of subjects will have their physiological nutrient requirement met at this level of dietary intake. Dietary fiber was another issue of concern for toddlers and preschoolers in the United States. The Adequate Intake recommendation is 19 g per day of dietary fiber, but the mean intake in toddlers and preschoolers was only nine and 10 g per day, respectively. On the other hand, 31% of toddlers and 59% of preschoolers exceed the recommended Upper Limit for preformed vitamin A. Zinc exceeded the Upper Limit of intake in 47% of toddlers and 72% of preschoolers. In a similar crosssectional study, Manios and colleagues assessed the nutrient intake of Greek children using a representative sample of toddlers and preschoolers. This European study found that 22% of toddlers and preschoolers had vitamin E intakes less than the Estimated Average Requirement.

Additionally, the percentage of children with intakes less than the EAR were 6% for riboflavin, 15% for niacin, and 20% for folate.

Intakes exceeding the Upper Limit were found for zinc, where 52% of subjects exceeded the Upper Limit recommendation and copper, where 8% of the subjects exceeded the Upper Limit recommendation.

Dietary nutrient availability for toddlers and preschoolers can vary widely in different countries and between different geographic areas and socioeconomic strata. Calloway and colleagues investigated the vitamin intakes of toddlers (18 to 30 months old) by food consumption records recorded

multiple times over a one year period at village sites in Egypt, Kenya, and Mexico. They found among Egyptian toddlers that 32% had inadequate intakes of vitamin A and 20% had inadequate riboflavin intakes. In Mexico, 68% of toddlers had inadequate intakes of vitamin A, 63% inadequate intakes of vitamin C, and 52% inadequate intakes of riboflavin. In Kenya, 44% of toddlers had inadequate intakes of vitamin B12. In all three localities, vitamin E intakes were low.

This research group also assessed the adequacy of mineral intakes in toddlers and found that iron intakes were inadequate in Egypt (35%), Kenya (13%), and Mexico (43%). Inadequate zinc intakes were found in 57% of Kenyan toddlers, 25% of Mexicans, and 10% of Egyptians. Inadequate calcium intake was highly prevalent in Kenyan and Egyptian toddlers.

Preschoolers (age four to five years) Preschool is a good time to finish the transition of a child's diet from the high fat phase (50% of calories) during the first two years of life to a more adult-like fat intake (25-35% of calories). Most of the fats consumed should be “good fat”; i.e., rich in mono- and polyunsaturated fatty acids. Fat is also important in the diet because it provides the fatsoluble vitamins A, D, E and K and facilitates the absorption of carotenoids. Serving lower-fat meals will help control body weight and reduce the risk of heart disease and other chronic diseases later in life. As with earlier in life, gender is not an important factor in determining nutritional needs at this stage of life, which is mainly affected by growth rates.

Snacking is an important opportunity to provide good nutrition to your preschooler. Don't waste the opportunity by serving sugary drinks, cookies or confections that are low in micronutrients.

Better alternatives would be foods such as fresh fruit or vegetables, air-popped corn, fat-free yogurt, or low-fat, fortified products with high nutrient value.

The transition from sole source breastfeeding or formula feeding, which

Fortification Product Applications (not limited to only these) Formula Milk/Growing Up Milk Juice Water Snacks Cereals

Prenatal Enhanced Beverage Nutrient %DV/Per Serving Folic Acid 100% Vitamin B1 10% Vitamin B2 10% Vitamin B6 10% Calcium 10% Iron 10% Toddler Cereal - Physical |& Cognitive Development Nutrient %DV/Per Serving Vitamin A 10% Niacin 10% Vitamin B1 10% Vitamin B2 10% Vitamin B6 10% Calcium 10% Selenium 10% Zinc 10% Choline 55 mg DHA 32 mg EPA 50 mg Cookie/Biscuit - Overall Wellness Nutrient %DV/Per Serving Vitamin A 10% Vitamin E 10% Vitamin B1 10% Vitamin B12 10% Vitamin C 10% Calcium 10% Iron 10% Phosphorus 3.5% Zinc 10% Protein 2%

meets an infant's nutritional needs to the “I'll eat what I want, when I want to!” attitude of many preschoolers can be a difficult and anxiety-provoking transition for many parents who are concerned with providing optimal nutrition for their child. The question of whether preschoolers need to be taking a multivitamin and mineral supplement to 47

Oil & Food Journal July 2012

ward off micronutrient deficiencies frequently comes up. According to the American Academy of Pediatrics, even though many children are “not perfect, vegetable-loving, cooperative eaters,” they conclude that “most children don't need vitamin supplements.”

Nevertheless, vitamin and mineral supplementation is widely used for children in some countries, such as the United States where 40% of preschoolers take supplements. If a parent feels that their child has an unbalanced diet due to poor eating habits or distinct food likes and dislikes, it is reassuring to know that in addition to vitamin supplements, various fortified foods are available in many markets that are acceptable to young children and could be used to fill in any dietary nutrient gaps and provide nutritional insurance at a reasonable cost. Fortified products come in a variety of options that can be used depending upon the child's age and circumstance, including specialized iannfant formulas d growing up milk for the younger child and various beverage choices and solid food alternatives for the toddler and preschooler. Product Applications (not limited to only these) A Special Mention Regarding Bone Health When most of us think about bone health, we think of the elderly as the group impacted most by issues surrounding osteoporosis. However, parents should view bone health as a type of 'bank account' for their children's later lives. Bone is a living tissue that is constantly being lost and replaced by new bone. According to the National Institute of Arthritis and Musculoskeletal and Skin Diseases, up to 90 percent of peak bone mass is acquired by age 18 in girls and age 20 in boys, which makes youth the best time for your kids to “invest” in their bone health. Getting plenty of calcium and vitamin D can help ensure optimal peak bone mass. Challenges in Product Formulation, Stability and Production We cannot place enough emphasis on the fact that the key to wide consumer acceptance of any fortified

food or beverage product, especially those targeting children, is taste.

Regardless of the nutritional value it may provide, if it does not immediately taste good, then the product is destined for failure right from the start. The challenges associated with formulations that incorporate multiple nutrients include the type of finished product as well as the desired taste, flavor and color of the finished product, solubility, b i o a v a i l a b i l i t y, p H l e v e l s , safety/toxicity, shelf-life, interactions, texture, mouth-feel, etc. For example, we know that the long-chain fish oils like EPA (eicosapentaenoic acid) are beneficial ingredients in products aimed at children. However, fish oils can be technically difficult to incorporate at functional levels because they can impart an unpleasant 'fishy' taste to a product and reduce shelf-life by increasing the chances of developing rancidity. It is also good to remember that some nutrients don't mix well with others. For example, it is well known that certain iron compounds can have unfavorable effects on product quality and consumer acceptance by increasing the oxidation of polyunsaturated fatty acids or other food ingredients. On the other hand, inclusion of suitable amounts of antioxidants, like a vitamin E, is important to protect polyunsaturated fatty acids from oxidation. In liquid beverages, adverse interactions between calcium and phosphorus can be tricky and can result in unsightly mineral precipitation products under certain conditions.

These and other technical challenges in product development can be overcome by partnering with premix experts during product development who can help you with the judicious selection of ingredient sources and strategies for employing appropriate taste masking techniques when needed. To keep upto-date and to find out more about conditions, nutrients and product applications for children's products and many more types of fortified products log on to www.fortitech.com.

Supply Chain

Supply Chain Management

Basic Concepts

S

upply chains encompass the companies and the business activities needed to design, make, deliver, and use a product or service. Businesses depend on their supply chains to provide them with what they need to survive and thrive. Every business fits into one or more supply chains and has a role to play in each of them. The pace of change and the uncertainty about how markets will evolve has made it increasingly important for companies to be aware of the supply chains they participate in and to understand the roles that they play. Those companies that learn how to build and participate in strong supply chains will have a substantial competitive advantage in their markets.

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Supply Chain Nothing Entirely New. . . Just a Significant Evolution The practice of supply chain management is guided by some basic underlying concepts that have not changed much over the centuries.

Several hundred years ago, Napoleon made the remark, “An army marches on its stomach.” Napoleon was a master strategist and a skillful general and this remark shows that he clearly understood the importance of what we would now call an efficient supply chain. Unless the soldiers are fed, the army cannot move.

Along these same lines, there is another saying that goes, “Amateurs talk strategy and professionals talk logistics.” People can discuss all sorts of grand strategies and dashing maneuvers but none of that will be possible without first figuring out how to meet the day-today demands of providing an army with fuel, spare parts, food, shelter, and ammunition.

It is the seemingly mundane activities of the quartermaster and the supply sergeants that often determine an army's success. This has many analogies in business. The term “supply chain management” arose in the late 1980s and came into widespread use in the 1990s.

Prior to that time, businesses used terms such as “logistics” and “operations management” instead. Some definitions of a supply chain are offered below: “A supply chain is the alignment of firms that bring products or services to market.”—from Lambert, Stock, and Ellram in their book Fundamentals of Logistics Management (Lambert, Douglas M., James R. Stock, and Lisa M. Ellram, 1998, Fundamentals of Logistics Management, Boston, MA: Irwin/McGraw-Hill, Chapter 14) “A supply chain consists of all stages involved, directly or indirectly, in fulfilling a customer request. The supply chain not only includes the manufacturer and suppliers, but also transporters, warehouses, retailers, and customers themselves.”— from Chopra and Meindl in their book Supply Chain Management: Strategy, Planning, and Operations (Chopra, Sunil, and Peter Meindl, 2001, Supply Chain Management:

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Strategy, Planning, and Operations, Upper Saddle River, NJ: Prentice-Hall, Inc. Chapter 1).

“A supply chain is a network of facilities and distribution options that performs the functions of procurement of materials, transformation of these materials into intermediate and finished products, and the distribution of these finished products to customers.”—from Ganeshan and Harrison at Penn State University in their article An Introduction to Supply Chain Management published at http://silmaril.smeal.psu.edu/supply_c hain_intro.html (Ganeshan, Ram, and Te r r y P. H a r r i s o n , 1 9 9 5 , “ A n Introduction to Supply Chain Management,” Department of Management Sciences and Information Systems, 303 Beam Business Building, Penn State University, University Park, PA). If this is what a supply chain is then we can define supply chain management as the things we do to influence the behavior of the supply chain and get the results we want. Some definitions of supply chain management are: “The systemic, strategic coordination of the traditional business functions and the tactics across these business functions within a particular company and across businesses within the supply chain, for the purposes of improving the long-term performance of the individual companies and the supply chain as a whole.”—from Mentzer, DeWitt, Deebler, Min, Nix, Smith, and Zacharia in their article Defining Supply Chain Management in the Journal of Business Logistics (Mentzer, John T.,William DeWitt, James S. Keebler, Soonhong Min, Nancy W. Nix, Carlo D. Smith, and Zach G. Zacharia, 2001, “Defining Supply Chain Management,” Journal of Business Logistics,Vol. 22, No. 2, p. 18).

“Supply chain management is the coordination of production, inventory, location, and transportation among the participants in a supply chain to achieve the best mix of responsiveness and efficiency for the market being served.”—my own words. There is a difference between the concept of supply chain management and the

traditional concept of logistics.

Logistics typically refers to activities that occur within the boundaries of a single organization and supply chains refer to networks of companies that work together and coordinate their actions to deliver a product to market.

Also traditional logistics focuses its attention on activities such as procurement, distribution, maintenance, and inventory management. Supply chain management acknowledges all of traditional logistics and also includes activities such as marketing, new product development, finance, and customer service.

In the wider view of supply chain thinking, these additional activities are now seen as part of the work needed to fulfill customer requests. Supply chain management views the supply chain and the organizations in it as a single entity. It brings a systems approach to understanding and managing the different activities needed to coordinate the flow of products and services to best serve the ultimate customer. This systems approach provides the framework in which to best respond to business requirements that otherwise would seem to be in conflict with each other.

Taken individually, different supply chain requirements often have conflicting needs. For instance, the requirement of maintaining high levels of customer service calls for maintaining high levels of inventory, but then the requirement to operate efficiently calls for reducing inventory levels. It is only when these requirements are seen together as parts of a larger picture that ways can be found to effectively balance their different demands. Effective supply chain management requires simultaneous improvements in both customer service levels and the internal operating efficiencies of the companies in the supply chain. Customer service at its most basic level means consistently high order fill rates, high on-time delivery rates, and a very low rate of products returned by customers for whatever reason. Internal efficiency for organizations in a supply chain means that these organizations get an attractive

Supply Chain storage of inventory? Should existing facilities be used or new ones built?

Once these decisions are made they determine the possible paths available for product to flow through for delivery to the final consumer.

4. Transportation—How should inventory be moved from one supply chain location to another? Air freight and truck delivery are generally fast and reliable but they are expensive. Shipping by sea or rail is much less expensive but usually involves longer transit times and more uncertainty. This uncertainty must be compensated for by stocking higher levels of inventory. When is it better to use which mode of transportation?

rate of return on their investments in inventory and other assets and that they find ways to lower their operating and sales expenses.

There is a basic pattern to the practice of supply chain management. Each supply chain has its own unique set of market demands and operating challenges and yet the issues remain essentially the same in every case. Companies in any supply chain must make decisions individually and collectively regarding their actions in five areas: 1. Production—What products does the market want? How much of which products should be produced and by when? This activity includes the creation of master production schedules 50 Oil & Food Journal

July 2012

that take into account plant capacities, workload balancing, quality control, and equipment maintenance.

2. Inventory—What inventory should be stocked at each stage in a supply chain?

How much inventory should be held as raw materials, semifinished, or finished goods? The primary purpose of inventory is to act as a buffer against uncertainty in the supply chain.

However, holding inventory can be expensive, so what are the optimal inventory levels and reorder points?

3. Location—Where should facilities for production and inventory storage be located? Where are the most cost efficient locations for production and for

5. Information—How much data should be collected and how much information should be shared? Timely and accurate information holds the promise of better coordination and better decision making. With good information, people can make effective decisions about what to produce and how much, about where to locate inventory and how best to transport it.

The sum of these decisions will define the capabilities and effectiveness of a company's supply chain. The things a company can do and the ways that it can compete in its markets are all very much dependent on the effectiveness of its supply chain. If a company's strategy is to serve a mass market and compete on the basis of price, it had better have a supply chain that is optimized for low cost. If a company's strategy is to serve a market segment and compete on the basis of customer service and convenience, it had better have a supply chain optimized for responsiveness.

Who a company is and what it can do is shaped by its supply chain and by the markets it serves.

How the Supply Chain Works Two influential source books that define principles and practice of supply chain management are The Goal (Goldratt, Eliyahu M., 1984, The Goal, Great Barrington, MA: The North River Press Publishing Corporation); and Supply Chain Management: Strategy, Planning, and Operation by Sunil Chopra and

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Supply Chain Peter Meindl. The Goal explores theissues and provides answers to the problem of optimizing operations in any business system whether it be manufacturing, mortgage loan processing, or supply chain management. Supply Chain Management: Strategy, Planning, and Operation is an in-depth presentation of the concepts and techniques of the profession. Much of the material presented in this chapter and in the next two chapters can be found in greater detail in these two books.

The goal or mission of supply chain management can be defined using Mr. Goldratt's words as “Increase throughput while simultaneously reducing both inventory and operating expense.” In this definition throughput refers to the rate at which sales to the end customer occur.

Depending on the market being served, sales or throughput occurs for different reasons. In some markets customers value and will pay for high levels of service. In other markets customers seek simply the lowest price for an item.

As we saw in the previous section, there are five areas where companies can make decisions that will define their supply chain capabilities: Production; Inventory; Location; Transportation; and Information. Chopra and Meindl define these areas as performance drivers that can be managed to produce the capabilities needed for a given supply chain.

Effective supply chain management calls first for an understanding of each driver and how it operates. Each driver has the ability to directly affect the supply chain and enable certain capabilities. The next step is to develop an appreciation for the results that can be obtained by mixing different combinations of these drivers. Let's start by looking at the drivers individually.

Production Production refers to the capacity of a supply chain to make and store products.

The facilities of production are factories and warehouses. The fundamental decision that managers face when making production decisions is how to r e s o l v e t h e t r a d e - o ff b e t w e e n

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responsiveness and efficiency. If factories and warehouses are built with a lot of excess capacity, they can be very flexible and respond quickly to wide swings in product demand. Facilities where all or almost all capacity is being used are not capable of responding easily to fluctuations in demand. On the other hand, capacity costs money and excess capacity is idle capacity not in use and not generating revenue. So the more excess capacity that exists, the less efficient the operation becomes.

Factories can be built to accommodate one of two approaches to manufacturing: 1. Product focus—A factory that takes a product focus performs the range of different operations required to make a

given product line from fabrication of different product parts to assembly of these parts.

2. Functional focus—A functional approach concentrates on performing just a few operations such as only making a select group of parts or only doing assembly. These functions can be applied to making many different kinds of products.

A product approach tends to result in developing expertise about a given set of products at the expense of expertise about any particular function. A functional approach results in expertise about particular functions instead of expertise in a given product. Companies need to decide which approach or what mix of these two approaches will give

The Five Major Supply Chain Drivers

Each market or group of customers has a specific set of needs. The supply chains that serve different markets need to respond effectively to these needs. Some markets demand and will pay for high levels of responsiveness. Other markets require their supply chains to focus more on efficiency. The overall effect of the decisions made concerning each driver will determine how well the supply chain

Supply Chain them the capability and expertise they need to best respond to customer demands.

As with factories, warehouses too can be built to accommodate different approaches. There are three main approaches to use in warehousing: 1. Stock keeping unit (SKU) storage—In this traditional approach, all of a given type of product is stored together. This is an efficient and easy to understand way to store products.

2. Job lot storage—In this approach, all the different products related to the needs of a certain type of customer or related to the needs of a particular job are stored together. This allows for an efficient picking and packing operation but usually requires more storage space than the traditional SKU storage approach.

3. Crossdocking—An approach that was pioneered by Wal-Mart in its drive to increase efficiencies in its supply chain.

In this approach, product is not actually warehoused in the facility. Instead the facility is used to house a process where trucks from suppliers arrive and unload large quantities of different products.

These large lots are then broken down into smaller lots. Smaller lots of different products are recombined according to the needs of the day and quickly loaded onto outbound trucks that deliver the products to their final destination.

Inventory Inventory is spread throughout the supply chain and includes everything from raw material to work in process to finished goods that are held by the manufacturers, distributors, and retailers in a supply chain.

Again, managers must decide where they want to position themselves in the trade-off between responsiveness and efficiency. Holding large amounts of inventory allows a company or an entire supply chain to be very responsive to fluctuations in customer demand.

However, the creation and storage of inventory is a cost and to achieve high levels of efficiency, the cost of inventory 53

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should be kept as low as possible.

There are three basic decisions to make regarding the creation and holding of inventory: 1. Cycle Inventory—This is the amount of inventory needed to satisfy demand for the product in the period between purchases of the product. Companies tend to produce and to purchase in large lots in order to gain the advantages that economies of scale can bring. However, with large lots also comes increased carrying costs. Carrying costs come from the cost to store, handle, and insure the inventory. Managers face the tradeoff between the reduced cost of ordering and better prices offered by purchasing product in large lots and the increased carrying cost of the cycle inventory that comes with purchasing in large lots.

2. Safety Inventory—Inventory that is held as a buffer against uncertainty.

If demand forecasting could be done with perfect accuracy, then the only inventory that would be needed would be cycle inventory. But since every forecast has some degree of uncertainty in it, we cover that uncertainty to a greater or lesser degree by holding additional inventory in case demand is suddenly greater than anticipated. The trade-off here is to weigh the costs of carrying extra inventory against the costs of losing sales due to insufficient inventory.

3. Seasonal Inventory—This is inventory that is built up in anticipation of predictable increases in demand that occur at certain times of the year. For example, it is predictable that demand for anti-freeze will increase in the winter. If a company that makes antifreeze has a fixed production rate that is expensive to change, then it will try to manufacture product at a steady rate all year long and build up inventory during periods of low demand to cover for periods of high demand that will exceed its production rate. The alternative to building up seasonal inventory is to invest in flexible manufacturing facilities that can quickly change their rate of production of different products

to respond to increases in demand. In this case, the trade-off is between the cost of carrying seasonal inventory and the cost of having moremflexible production capabilities.

Location Location refers to the geographical siting of supply chain facilities. It also includes the decisions related to which activities should be performed in each facility. The responsiveness versus efficiency trade-off here is the decision whether to centralize activities in fewer locations to gain economies of scale and efficiency, or to decentralize activities in many locations close to customers and suppliers in order for operations to be more responsive. When making location decisions, managers need to consider a range of factors that relate to a given location including the cost of facilities, the cost of labor, skills available in the workforce, infrastructure conditions, taxes and tariffs, and proximity to suppliers and customers.

Location decisions tend to be very strategic decisions because they commit large amounts of money to long-term plans. Location decisions have strong impacts on the cost and performance characteristics of a supply chain. Once the size, number, and location of facilities is determined, that also defines the number of possible paths through which products can flow on the way to the final customer.

Location decisions reflect a company's basic strategy for building and delivering its products to market.

Transportation This refers to the movement of everything from raw material to finished goods between different facilities in a supply chain. In transportation the tradeoff between responsiveness and efficiency is manifested in the choice of transport mode. Fast modes of transport such as airplanes are very responsive but also more costly. Slower modes such as ship and rail are very cost efficient but not as responsive. Since transportation costs can be as much as a third of the operating cost of a supply chain, decisions made here are very important.

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V AIM EVENTS

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Oil & Food Journal July 2012

Supply Chain whole. That is the way that stock markets or other free markets work and supply chains have many of the same dynamics as markets. Information is used for two purposes in any supply chain: 1. Coordinating daily activities related to the functioning of the other four supply chain drivers: production; inventory; location; and transportation.

The companies in a supply chain use available data on product supply and demand to decide on weekly production schedules, inventory levels, transportation routes, and stocking locations.

There are six basic modes of transport that a company can choose from: 1. Ship which is very cost efficient but also the slowest mode of transport. It is limited to use between locations that are situated next to navigable waterways and facilities such as harbors and canals.

2. Rail which is also very cost efficient but can be slow. This mode is also restricted to use between locations that are served by rail lines.

3. Pipelines can be very efficient but are restricted to commodities that are liquids or gases such as water, oil, and natural gas.

4. Trucks are a relatively quick and very flexible mode of transport. Trucks can go almost anywhere. The cost of this mode is prone to fluctuations though, as the cost of fuel fluctuates and the condition of roads varies.

5. Airplanes are a very fast mode of transport and are very responsive.

This is also the most expensive mode and it is somewhat limited by the availability of appropriate airport facilities.

6. Electronic Transport is the fastest mode of transport and it is very flexible and cost efficient. However, it can only be used for movement of certain types of products such as electric energy, data, and products composed of data such as 56

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music, pictures, and text.

Someday technology that allows us to convert matter to energy and back to matter again may completely rewrite the theory and practice of supply chain management (“beam me up, Scotty. . .�).

Given these different modes of transportation and the location of the facilities in a supply chain, managers need to design routes and networks for moving products. A route is the path through which products move and networks are composed of the collection of the paths and facilities connected by those paths. As a general rule, the higher the value of a product (such as electronic components or pharmaceuticals), the more its transport network should emphasize responsiveness and the lower the value of a product (such as bulk commodities like grain or lumber), the more its network should emphasize efficiency.

Information Information is the basis upon which to make decisions regarding the other four supply chain drivers. It is the connection between all of the activities and operations in a supply chain. To the extent that this connection is a strong one, (i.e., the data is accurate, timely, and complete), the companies in a supply chain will each be able to make good decisions for their own operations.

This will also tend to maximize the profitability of the supply chain as a

2. Forecasting and planning to anticipate and meet future demands. Available information is used to make tactical forecasts to guide the setting of monthly and quarterly production schedules and timetables. Information is also used for strategic forecasts to guide decisions about whether to build new facilities, enter a new market, or exit an existing market.

Within an individual company the tradeoff between responsiveness and efficiency involves weighing the benefits that good information can provide against the cost of acquiring that information. Abundant, accurate information can enable very efficient operating decisions and better forecasts but the cost of building and installing systems to deliver this information can be very high.

Within the supply chain as a whole, the responsiveness versus efficiency tradeoff that companies make is one of deciding how much information to share with the other companies and how much information to keep private. The more information about product supply, customer demand, market forecasts, and production schedules that companies share with each other, the more responsive everyone can be. Balancing this openness however, are the concerns that each company has about revealing information that could be used against it by a competitor. The potential costs associated with increased competition can hurt the profitability of a company.

Food Park

Jagdishpur to have

U.P's first mega food park

I

n a landmark decision, Uttar Pradesh government cleared the decks for setting up the state's first Mega Food Processing Park at Jagdishpur in Sultanpur district. Pending since 2010, when the Union Ministry of food processing industries gave an inprinciple approval to the proposal submitted by Aditya Birla Nuvo Limited (ABNL), the food park project, was also cleared by Uttar Pradesh State Industrial Development Corporation (UPSIDC).

Speaking to TOI, Managing Director, UPSIDC, Manoj Kumar Singh, said: "UPSIDC, on allowed ABNL to sublet the land acquired for setting up the food park. Of the 833 acres owned by IndoGulf, a Special Purpose Vehicle will be floated for setting up the food park on 72 acres.'' Singh also said the project would invite an investment of Rs 148 crore and create direct and indirect employment for nearly 30,000 persons.

Earlier, the project was caught in a web of technical complications regarding the land lease. Under the UPSIDC by-laws, only two land leases could be issued.

Holding the first lease itself, the second sub-lease for the MFP land was with ABNL. However, according to the Central government rules for setting up the MFP, land holdings must be in the names of the individual processing units.

Since ABNL could not further lease this land to individual units, UPSIDC decided to sell additional land adjacent to

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Oil & Food Journal July 2012

the existing MFP to ABNL, allowing it to hold the first lease and issue sub-leases to individual processing units.

The mega food park is expected to leverage UP's position as a leading supplier of raw materials - wheat, sugar, potato, milk and livestock - in agriculture. The scheme is expected to raise India's processing of perishables from the existing 6% to 20%, value addition from 20% to 35% and the share in global food trade from 1.5% to 3% by 2015. In this light, the current project is expected to tap into UP's potential by developing the value chain from the farm to the market.

According to ABNL's existing proposal, the Central Processing Centre (CPC) will be set up at Jagdishpur, with primary processing centres at Sultanpur city, Faizabad, Rae Bareli, Barabanki, Lucknow, Pratapgarh, Ambedkar Nagar and Jaunpur.

With UPSIDC allowing ABNL to sublet the land, ABNL will now have 72 acres of land transferred to it from Indo Gulf Fertilisers to the Special Purpose Vehicle (SPV) floated for setting up the MFP. Though the company had, in its initial proposal, proposed to hold 94% equity in the SPV to be floated for the MFP, it has, subsequently, agreed to keep its equity at a maximum of 74%, as desired by the government.

Currently, though five food parks exist in UP, only one - at Sahjanwa, Gorakhpur -

has been able to remain profitable since its inception in 2005. Attempting to bridge the gaps through the new 3-tier MFP scheme, the government also made provisions for an efficient supply chain and backward linkages. The scheme will also provide processing, packaging, environmental protection systems, quality control laboratories and trade facilitation centres.

Highlights The Mega Food Park Scheme is expected to raise processing of perishables in the country from existing 6% to 20%, value addition from 20% to 35% and share in global food trade from 1.5% to 3% by 2015.

The scheme aims to provide excellent infrastructure - transportation, logistics, centralised processing centres, effective supply chain, processing, packaging and environment protection systems, quality control laboratories and trade facilitation centres.

Between 50 to 100 acre land holdings will be set aside for setting up Central Processing Centres. Addition land will be needed for Primary Processing Centres and Collection Centres. Each project is expected to have around 30 to 35 food processing units with a collective investment of Rs 250 crore.

Eventual annual turnover is expected to be between Rs 450 and Rs 500 crore.

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Oil & Food Journal July 2012

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