Beverages & Food Processing Times Jan'13 (I)

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Vol.5, Issue 7, Jan (I) 2013, Rs. 20/-

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Pawar speaks against concession on food grain T

aking on the UPA government over the Food Security Bill, union Agriculture Minister Sharad Pawar said here that huge concessions on food grain could lead to serious problems.

Pawar, who was in Mumbai to inaugurate the renovated Nationalist Congress Party (NCP) office, said that the quantum of subsidy needs serious reconsideration.

"Whether giving concession to nearly 70 percent of the population is necessary is a matter of serious

rethinking," Pawar said on the sidelines of the inauguration of the office.

"Foodgrains are the need of everyone.

However, we buy wheat for Rs.18 per kg and want to provide it for Rs.2 per kg to nearly 70 percent of the people," he said.

"What I am trying to say is that giving a 50 percent or even 75 percent subsidy is alright. But what we are not considering here is the situation of the farmer who is producing food grain," Pawar added.

He said that while 70 percent people getting wheat at Rs.2 per kg is good, the

farmer who produces it will not get a remunerative price and will end up cultivating another crop as wheat is not fetching him a good price.

"If the farmer starts cultivating another crop, wheatproduction will decline, thereby making the country's food security problem more serious," Pawar said.

The inauguration of the NCP's new Mumbai office was attended by several central and state ministers, including Ajit Pawar, R.R. Patil, Tariq Anwar and Praful Patel.

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Beverages & Food Processing Times-Jan-I-2013

Dairy News

3

Dairy sector becomes a sweet spot for PE funds

A

uptick in PE investment in the sector.

“For a company like Parag, growing at 35 per cent in the past 10-15 years, heavy investment is required to maintain this growth and for that,

fter a brief lull, private equity (PE) firms are back to investing in India's $70billion (about Rs 3.5 lakh crore) dairy sector. After Carlyle's $22-million (Rs 119.4 crore) investment in Tirumala Milk Products in May 2010, no big deals happened for the rest of 2010 and all of 2011. However, between May and November 2012, the sector attracted $67.5 million (Rs 366 crore) from PE funds, according to Venture Intelligence data.

This year's deals include Ambit Pragma's investment in Neo Anurena Tristar Food Products for an undisclosed amount, IDFC PE's $29million (Rs 157.4 crore) investment in Parag Milk, the $18.5-million (Rs 100.4 crore) investment by Abraaj Capital and Rabo Equity in Prabhat Dairy, and Cargill Ventures' $20million (Rs 108.5 crore) fund infusion in Dodla Dairy. What explains the sudden surge in investment flow towards the dairy sector? The general food and agricultural sectors have been on the radar of PE players for the past four years, says Rajesh Srivastava, chairman and managing director of Rabo Equity Advisors, a subsidiary of Rabobank.

PE players have now turned their attention to the dairy sector. With the rising incomes of the health-conscious middle class, the demand for both milk and value-added dairy products is on the rise. Assocham said the domestic dairy sector would grow to Rs 5 lakh crore by 2015, with the output estimated to rise to 190 million tonnes from the current 123 million tonnes.

India is the world's largest producer of dairy goods, accounting for nearly 20 per cent of global milk output.

According to experts, the country

outside investment is required. Besides bringing money, these investors are also helping to attract good talents, in process and systems,” says Shirish Upadhyay, senior vice-president (planning), Parag Milk.

Parag will use the proceeds from IDFC fund to build capacities in various product lines, strengthen procurement and provide a part-exit to existing investors, Motilal Oswal Private Equity, which invested in the company in 2008.

The key differentiation of the companies that raised money from the PE funds and those didn't is valueadded quality products, backed by strong branding and robust distribution systems. Take, for instance, Parag Milk Foods. It distributes its products under Gowardhan, GO and Pride of Cows brands. Parag generates 60 per cent of its revenue coming from value-added products such as cheese, ghee and

PE DEALS IN THE DAIRY SPACE SINCE 2010 Date

B uye r

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M ay ’10

C arlyle

Tirumal a M ilk P roduc ts

M ay ’12

A mbit P ragma

Neo Anure na Tristar

Sep ’12

IDFC P E

Parag Mil k

Sep ’12

A braa j Capita l, Ra bo#

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Nov ’12

C argill V entures

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* Food P roduct s # Equity

needs to raise milk output by around five million tonnes a year to meet the growing demand, compared with the average annual growth of 3.2 million tonnes in the past 15 years. This additional capacity would require huge funds. And the entrepreneurs, who are largely seen as conservative, closelyheld and unorganised, have realised this, and been exploring avenues for funds. This is another reason for the

Amount (R s c r) 22 NA 29 18.5 20

Source : Venture Inte lligence

yoghurt, growing at 20 per cent per annum.

According to Satish Mandhana, managing partner and CIO at IDFC Alternatives, the dairy sector has the potential to build the rural economy.

“We believe that companies like Parag's excitement blend of traditional values and modern outlook, mirror their brands and have the potential to achieve that,” he said in a statement.

According to Srivastava, the margins will be better in companies that are offering value-added products. While milk production alone will not be profitable, the margins can be increased to five-six per cent from the current level of three per cent, by increasing volumes and adding more value added products.

According to Keshav Misra, partner (fast moving consumer goods) at Baring Private Equity Partners India, the dairy sector is consumer-driven, offering good returns. And for funds, the consumption story is a key attraction, he adds. For a company wanting to go public, raising money

from the PE is the first step, because the PE funds will make sure the company's books are clean, he says.

Kunal Bhakta, partner & head of research, Lastaki Advisors Pvt Ltd, agrees.He says that the return on capital employed in dairy business is higher than most traditional businesses.

According to industry sources, the return on capital by a dairy firm is around 35-40 per cent.

Bhakta, however, adds that the sector doesn't have a great track record in terms of corporate governance and therefore, investors need to tread cautiously.

On the flip side, PE players feel that while there are more investment opportunities available, some regulatory issues kept the sector from realising its true potential.

Besides, high government intervention in the sector, especially in pricing and procurement, has also made India seen as an unreliable overseas supplier even though it is the largest producer of milk.

Beverages & Food Processing Times-Jan-I-2013

Dairy News

4

Bikash Bharali - a progressive Dudhwallas milk victory in dairy farmer from Jorhat central, north Gujarat

B

ikash Bharali, a progressive farmer from Assam's Golaghat District, who runs a modern dairy farm provides an example of selfreliance that the youth of the region can follow.

Thirty-one-year-old Bharali is one of the few dairy farmers in Assam who has a modern farm with the latest milking machines.

His childhood dream was to become a successful farmer and he got a diploma in Piggery and Dairy farming from Wye College in London.

He returned to Assam in 2004 and set up a dairy farm in 23 acres on the outskirts of Bokhakat town.

"The State Bank of India supported me to start my farm. Then I grew slowly.

It's quiet big. We are now thinking to mechanize the whole system, reduce the stress on our people, save on time, and give freedom to the animals," said Bharali.

Bharali, who owns 23 Jersey Cows and six calves, has an annual turnover of

Rs. 8-9 lakhs, and is a source of inspiration for the educated unemployed youth of the state.

"We have now got a milking machine.

We can milk four cows at a time. It's saving time. My people have taken it in a very interesting way, and they like it.

We do cut grasses with the machines now. That is helping in saving time.

Few months back we used to sell our

grass in the market, from that we got some money and we are putting a 120 metre fence now," he added.

Four permanent workers and nine daily wagers are employed at the farm.

"We work here, and I get many benefits in returns. I can send my children to school for education. If things improve further then I hope that I will benefit and have a bright future," said Bobby Borah, a woman farmer.

The youth in Assam are now channelizing their energy towards bringing about a positive change in the society and improving the socioeconomic condition of the people.

A

ll 'dudhwallas' contesting the assembly elections in Gujarat

have won comfortably. This time as many as 10 dairy co-operative leaders including chairmen of two district dairy milk unions were fielded by both Congress and BJP in central and north Gujarat regions of the state.

Interestingly, the total number of dairy co-operative leaders fielded by both the parties this year is almost double when compared to the last assembly polls in 2007.

Of the three dairy chairmen who were in fray in 2007, two of them - Baroda Dairy's then chairman Madhu Srivastava of the BJP and Amul Dairy chairman Ramsinh Parmar of the Congress had emerged as winners.

The twin districts of Anand and Kheda district, the cradle of country's white revolution, are traditional strongholds of Congress. Ramsinh Parmar, Amul Dairy's chairman, and Rajendrasinh Parmar, Amul Dairy's vice-chairman emerged as winners again.

While Ramsinh Parmar retained his

hold on Thasra seat in Kheda district, Rajendrasinh, for whom the Borsad seat was new in Anand district, also emerged as the winner.

Rajendrasinh, as Congress MLA, was earlier representing Bhadran seat which adjoins Borsad. Another Congress leader and director of Amul Dairy Mansinh Chauhan also won Balasinor seat in Kheda district.

In the tribal belt of Panchmahal, Panchamrut Dairy's chairman Jetha Bharwad of BJP won Shehra assembly seat again by a margin of over 28,000 votes. Bharwad is enjoying a second term as the dairy co-operative's chairman after he got 18 directors elected unopposed in his panel when elections of Panchamrut Dairy were held in October.

At Banaskantha which is home to Asia's largest dairy union - Banas Dairy - three milk co-operative leaders won the poll battle. If state health minister Parbat Patel who is director in the dairy's board won on Tharad seat, another BJP leader Shanker Chaudhary who was contesting from Vav also emerged victorious.

Even for Congress fielding a cooperative leader at Dhanera seat helped.

Joita Kasna Patel won the seat with a margin of over 30,000 votes.

In Vadodara district, the BJP had fielded Baroda Dairy's director.

Pune dairy farm opts for musical therapy to boost milk production A farm near Pune in Maharashtra has opted for musical therapy to soothe its dairycows in order to boost milk yields.

The farm has bout three thousand cows of Holstein and other breeds.

The managers of the farm believe that music plays a vital role in the milk production as it makes the environment more conducive for the cows.

Parag Shah, director of the dairyfarm, said that the idea of playing music is adopted form ancient Hindu mythology.

"The idea of playing music in the cowshed comes from our mythology in which, Lord Krishna used to play flute and cows used to get attracted.

Similarly, it is also an Indian concept where we believe that just like human beings, even cows like music. So we play classical music and we sometimes also tune the radio," he said.

He added that the yield has increased about 40 percent.

Speakers are installed across the shed and music, mostly classical and soft, is played throughout the day.

Researches in the West have proven that music acts as a stress reliever and bring several health benefits.

Beverages & Food Processing Times-Jan-I-2013

5

Beverages & Food Processing Times-Jan-I-2013

Company report

6

FROZEN DESSERT V L ately there has been a lot of hues and cry about the use of vegetable oil inice-creams, it has been claimed that consumers are feeling very embittered and cheated.

The whole issue has been craved as if the companies that are using vegetable oils instead of milk fat in the ice cream have done a delinquency that is reprehensible.Amusingly the news has also claimed that the use of vegetable oil in ice-creams is not health friendly and is as well shady to the taste buds.

But what ever seen or said, the fact is that very few consumers can tell the difference between an ice cream and frozen dessert.

There is actually a very thin line dividing frozen desserts and icecreams. The Traditional, or “regular,” ice cream uses cream or milk containing about 10 percent butter-fat, along with sweeteners, flavorings and thickeners. Regular ice cream is somewhere in the middle of the ice cream health scale, with light and reduced fat ice creams containing fewer calories and less fat than regular ice cream, and premium and super premium ice creams containing more fat and calories than regular ice cream.

A frozen dessert is vegetable oil based product that contains imported palm kernel oil or coconut oil instead of locally produced butter fat. Frozenyogurt comes from non-fat or regular yogurt that is mixed with flavorings, sweeteners and thickeners, then churned and frozen in the manner of regular ice cream. The beneficial bacteria found in regular yogurt do not survive the freezing process. While real ice cream is made with milk fat; frozen dessert is made with vegetable fat, which is almost 80% cheaper.

However according to the definition of milk and milk products under the Prevention of Food Adulteration Rules, 1955, an ice-cream is a product with not less than 10 per cent of milk fat, whereas in comparison, frozen desserts contain vegetable oils, such as palm kernel oil and coconut oil, that can be brought in tariff-free from anywhere in the world. Vegetable oils are also much cheaper than butter fat and hence becoming very cost effective for the ice cream industry that offer frozen dessert.

Excluding a few companies in the market such as Amul, Mother Dairy, Hatsun Agro Food Ltd and Havmor, others – Led by Hindustan Unilever's Kwality Walls, Vadilal, Lazza Ice Creams and Cream Bell all serve frozen desserts - in identical cups, cones and sticks as ice cream- and have found a strong foothold in the country

in less than two decades since Kwality Walls introduced them. International brands such as HaagenDazs, Movenpick (Nestle), Swensen's and Baskin Robbins offer original or regular ice-creams. Vadilal sells both.

Frozen desserts, which look and taste like ice cream but are made out of vegetable fat, have silently grabbed a 40% share in India's 1,800-crore organised ice-cream market without most consumers realizing they are not ice cream.

But food authority officials and original ice-cream makers such as Amul and Mother Dairy that use only dairy fat say frozen dessert makers have been misleading consumers by passing them on as ice cream. And they claim that Consumers have been eating frozen desserts presuming them to be ice creams.

Amul, the category leader in ice creams with 40% market share, declaresthat companies are misleading consumers by not mentioning upfront they are frozen desserts and pricing them as much as ice cream despite lower costs.

Consumers are fooled into buying

frozen desserts. It is a lookalike category. Most brands mention frozen desserts in small letters and push the category instead of advertising it as dessert.

What the opponents need to understand is that the consumers make choices based on a number of factors including calories, fat content, indulgence and portion control – but taste preference is always key and as such and the companies always strive for superior tasting products. There is no doubt dairy is the number one ingredient in all ice cream, frozen dairy desserts and frozen desserts. In fact, frozen desserts do contain milk, just not the kind that contains butter fat, which is the crux of the issue for the rival ice cream makers.

The genuine fact is that there is no health hazard in using either of the two ingredients. Traditionally, icecreams have been made out of milk fat, so it might be considered as cheating by some consumers. But nutritionists say there is nothing

terribly wrong about vegetable fat.

After all, edible oil is regularly used in Indian cooking and snacks. But it could be more harmful than milk fat.

Vegetable fat contained in frozen desserts is generally unsaturated and hence, healthier, Ice creams and frozen desserts are two very different things.

Ice creams are made of dairy fat which contain cholesterol and Trans fats therefore aren't very healthy whereas Frozen Desserts are made of fat from vegetable oils which contain very less cholesterol and no Trans fats making them a very healthy snack!

Talking in aspect regarding the fatty issue, it is Ideally known that frozen dessert contain no more than 4 grams fat and the fat quotient of frozen desserts varies considerably, depending on the amount of fat in the cream, milk or yogurt used as the primary ingredient. In general, ice cream contains between 6 to 16 grams of fat per ½-cup serving, with premium ice creams containing between 17 and 24 fat grams per serving. Frozen yogurt ranges from the 0 grams fat contained in ½ cup of non-fat yogurt brands, to the 1 to the 3 fat grams in low-fat frozen yogurt, and the 4 to 9 fat grams in premium frozen yogurt desserts. The average frozen yogurt and light ice creams take up about 4 percent of your daily allotment for cholesterol, while regular and premium ice cream represents at least 7 percent of your recommended daily amount of cholesterol.

So categorically the fat uptake in ice creams are much more comparatively and in today's time of health consciousness many consumer like the fact that they can consume something that is equivalent to ice cream but rewardingly not as high in calories as an original ice cream.

For example depending on brands and flavoring, regular ice cream contain between 130 and 190 calories.

Factoring in light and premium ice creams, the caloric range runs from 90 to 340 calories in each ½ cup scoop.

Regular, or low-fat, frozen yogurt has between 70 to 140 calories in each ½ cup serving, with the entire range of frozen yogurt running from 90 to 190 calories per ½ cup scoop. The carbohydrate count has less to do with the type of dairy product used than on the sweeteners and flavorings. Regular and light chocolate ice cream, as well as chocolate frozen yogurt, all has about 18 to 19 grams of carbs per serving.

Ice cream and frozen dessert are calcium-rich dairy products. The

Beverages & Food Processing Times-Jan-I-2013

Company report

7

ERSUS ICE CREAM average chocolate frozen yogurt and ice cream products contain between 72 and 85 grams calcium according to USDA figures. Therefore, milk-based desserts like ice cream and frozen yogurt deliver between 7 to 9 percent of the calcium you need each day. Thus it is not difficult to assess that frozen desert have nutrition value better than ice cream with an added importance of lesser calories and cholesterol As a matter of fact you'll get many of the vitamins and minerals offered by milk in frozen yogurt and ice cream.

Varieties featuring real fruit may provide additional nutrients. According to USDA figures, the average ½ cup serving of chocolate frozen yogurt or chocolate ice cream provides at least 5 percent of the protein you need each day. The dairy desserts also deliver 2 percent of the recommended daily values of iron, magnesium, phosphorous, potassium and vitamin A, as well as several B-complex vitamins, including folate. The ice cream varieties were slightly higher in these nutrients than the average frozen yogurt. Some frozen dessert makers add extra vitamin C to preserve flavor and color, meaning that your vitamin C content may vary from 1 percent to 10 percent.

The Price factor is another major point that cannot be eluded. Using of vegetable oil becomes pocket friendly not only for the industry but also for the consumers. Like One kg of vegetable fat (vanaspati) is about Rs 50-55 a kg, while one kg of milk fat (ghee) is Rs 245-350 a kg. On a litre of ice-cream, cost of a milk fat mix is Rs 60/litre and the cost of vegetable oil mix is Rs 30/litre.

Vadilal manufactures both ice-creams and frozen desserts in a 50:50 ratio to cater to all segments of customers and according to them, while it is cheaper to produce frozen desserts, the margins for both turn out to be the same.

Further the vadilal folksround aboutthat consumer are well aware of the difference. In Europe, both are called ice-cream, while in the US, the differentiation is maintained.

The Rs 2,500-crore frozen dessert market in India is growing at an average of 15 per cent and is still dominated by regional players. The per capita consumption of ice-creams in India is very low and considering the hot weather, there is space for factory made ice-creams along with matkakulfi, asharfi, koti ice-cream and Rs 5 candies to survive and grow.

Frozen desserts by Kwality Walls, Vadilal, Lazza, and Cream Bell have already grabbed 40% share in ice-

cream market, what more is there to say except that the consumer of today is health conscious one, who go for things that can give your taste buds a tingle but with the stipulation that it does not play with their health.

Frozen dessert makers are, meanwhile, upbeat about the prospects of this category.Hindustan Unilever's Kwality Walls, which makes only frozen desserts and does not use milk fat, pronounces the category to be growing on the strength of a series of exciting

products. Cream Bell, an ice cream and frozen dessert brand of RJ Corp's Devyani Food Industries, have frozen desserts accounting for 50% of its sales. The company entered the category in 2006. There is no dearth of takers for frozen desserts in the Indian market now. For cream bell, both categories are growing at 25-30%.

South Indian ice cream player Lazza Ice Creams, which introduced frozen desserts a decade ago, has seen the vegetable stuff overtaking ice cream in

the last five years when it has been growing 50% year-on-year. Frozen desserts accounted for 55% of Lazza's turnover of 150 crore in 2010-11.

Indian mind-sets have changed towards frozen desserts and the consumer is comfortable in consuming them.

Frozen desserts have taste as par excellence and that is the reason the few consumer can differentiate. Those who can distinguish go for frozen dessert or yogurt for both-health and taste.

Beverages & Food Processing Times-Jan-I-2013

Food Grain News

8

Benefits of whole grains used in Indian food

B

enefits of whole grains are usually limited to wheat. We hear constant mention of whole bread bread, whole muffins, whole wheat rotis and other dishes made with whole wheat grainand how they are good for us.

But what about the other whole grains found in Indian kitchens? Even though wheat is the primary component in rotis and chappatis, Indians also have a wide variety of whole grains that are used in traditional cooking. Today we look at atta or flour made from alternative whole grains that is gluten free, healthy and has several health benefits - in some cases much more than wheat. We bring out a list of whole grains easily available in India but rarely used in increasingly modernised, urban kitchens. These are the whole grains and their benefits.

Benefits of Whole Grains as flour Nutritionist Neelanjana Singh with the Heinz Nutri Life Clinic spells out the benefit of flour, something we may over look while eating, she says, "Breads (both leavened and unleavened) can be made from these different flours.

Breads are the staple food in most diets. Thus, it is essential that the flour used to make the breads be wholesome and nutritious. Flours or attas form the staple food, contributes significantly to the fibre, mineral, starch and antioxidant content of the diet."

Whole Grains: Jau (Barley) Jau is a cereal whose flour is rich in many minerals including calcium, zinc, magnesium and potassium. This profile of minerals makes it an appropriate

choice for hypertensive individuals.

This flour has a higher content of protein as compared to wheat.

Moreover, the starch content is of the resistant variety, making it suitable for diabetics.

You ought to know: Barley is great for a healthy diet. Barley includes both soluble and insoluble fiber in abundance. It can be added to soups, cereal and salads.

Whole Grains: Bajra (Spiked /Pearl Millet) Within India, the dry regions of Rajasthan produce and consume this cereal, bajra with gusto. Bajra rotis (flatbread) look like small tortillas. The

roti is made with many flavourenhancing ingredients such as onions, spices and herbs.

You ought to know: Bajra is rich is proteins and amino acids. It is also a good ingredient for anemic as it contains high amounts of iron. It supplies vitamin B12 to your nervous system.

Whole Grains: Jowar (Great Millet/SorGhum) The flour made from this kind of millet is superior to wheat in many ways.

Firstly, the antioxidant content of the

flour is very high. Jowar is also a relatively inexpensive cereal. The nutrient profile is such that it is ideal for diabetics and for those who have elevated cholesterol levels.

You ought to know: Jowar prevents hunger due to high fiber content, which in turn is good for weight loss.

Whole Grains: Ragi (Finger Millet) The flour of this grain is high on protein and low in fat. In the South of India, this millet is ground and cooked with milk/buttermilk /water and served as the first food to babies.

Whole Grains: Kuttu (Buckwheat) Kuttu is extremely popular during the

Navratra season. Popularly known as vrat ka atta, buckwheat varieties provide between 17g to 23 g dietary fibre per cup. The impressive fibre content of this flour helps to lower the levels of bad cholesterol (LDL) in the blood and thus lower the risk of heart disease. According to the 2010 Dietary Guidelines from the U.S. Department of Health and Human Services, one should aim to get at least 14g of dietary fibre for every 1000 calories consumed. There are two varieties of buckwheat: dark and light. It is the dark variety that is largely consumed in

India and the lighter one is consumed in other parts of the world, particularly inRussia and France.The ground form of the dark variety is grey-brown in colour and has a slight bitter earthy taste.

Whole Grains: Ramdana (Amaranth) This is a very versatile variety of crop and is quite nutritious too. Amaranth can be ground into flour, flaked like chidwa or oatmeal, or popped like popcorn. Being high in fibre, it eases constipation and contributes to lowering cholesterol. As it is high on protein (15%), it serves as a good source of vegetable protein. In the US, there is an increasing interest in this crop which is grown both as a grain and as a leafy vegetable.

Whole Grains: Makki (Corn) This is a good source of the Bcomplex vitamins and also of fibre.

The flour that is generally consumed by us is made from the white or the yellow corn variety.

The rotis (flatbread that is unleavened) made from this flour have a mild sweet flavour that goes well with a slightly pungent variety of leafy vegetable.

Whole Grains: Singhara (Chestnut) The flour is made from the nuts of the water chestnut and has a slightly higher fat content than wheat. However, this fat is free from cholesterol and transfats. The flour is commonly used by those sensitive to wheat. The flour is rich in B vitamins, starch and minerals such as potassium. However, the slightly high starch content keeps the weight-watchers away from this flour!

Stocking, distribution of foodgrains a concern: NHRC

F

lagging the food security issue, NHRC Chairperson Justice K G Balakrishnan Friday said though there is improvement in foodgrain production, its stocking and distribution among the needy is an area of concern.

Addressing a conference on 'Right to Food', Balakrishnan said "food availability is a major concern, especially for our children. A child's brain develops during the age of 0-7

years. If in that period, our kids remain malnourished, our future generation will be devoid of intellect. We need to address this problem at the earliest."

He said malnourished children and falling levels of calorie consumption are some other areas which require attention.

Despite, Integrated Child Development Services (ICDS), mid-day meal scheme, Targeted Public Distribution System and other such measures, a lot

of ground needs to be covered to ensure Right to Food for all, he said.

"There is improvement in foodgrain production but its stocking and distribution among the needy is a point of concern," he said.

Batting strongly for direct cash transfer scheme, Sudhir Kumar, Secretary of Department of Food & Public Distribution, said that via cash subsidy, government will be able to plug largescale leakages in our PDS system.

"Most leakages in our Public Distribution System are caused because the retailer gets the products at subsidized rates way below market price. With Direct Cash Transfer coming into play, retailer will get the product at market price while the subsidy will be directly credited into the bank account of the beneficiary," said Kumar.

Beverages & Food Processing Times-Jan-I-2013

Food Grain News

9

Wheat exports can offset gold imports If the Government is worried about excessive gold imports, it should be equally concerned about the rising stockpile of wheat, which will cross more than 60 million tonnes (economic cost of about $21 billion or Rs 1,15,000 crore) by June 2013, or 300 per cent of the mandated reserves.

Foreign exchange requirements of rising gold imports and increased dollar realisations from wheat exports can substantially offset each other.

Liquidating stocks of golden grain will also save on fiscal deficit, as it will cut the food subsidy bill.

WRONG STRATEGY In case policy makers increase the efficiency of wheat export and target it to 10 million tonnes, as recently recommended by the Commission of Agricultural Costs and Prices (CACP) in its meeting with the Finance Minister, this will generate export of approximately $3 billion (Rs 16,500 crore), equivalent to a 7.5 per cent reduction on provisional gold imports of $40 billion anticipated this year.

There is always apprehension that higher duties on gold imports may create a parallel 'hawala' market that will defeat the purpose of duty.

Are wheat exports of 10 million tonnes in 2013-14 logistically feasible? Yes they are, provided the private sector is also allowed to partake in FCI stocks, in addition to the existing canalised route of three PSUs. Exclusion of private trade from exporting Government's glut of grain is a highly restrictive policy framework, acting as a deterrent in swift evacuation of grains.

During August-December 2012, PSUs contracted two million tonnes and shipped 1.2 million tonnes (or an average of 400,000 tonnes per month) with proactive back-up operations of FCI. PSUs can achieve the limited objective of exporting a maximum of five million tonnes annually through a staggered tender-centric mechanism.

This leaves the effort required to ship additional five million tonnes by private players to achieve 10 million tonnes of export.

The timing of export is critical for better value realisation. As of now, average realisation of two million tonnes is $315/tonne fob while the minimum and maximum range has varied between $296 and $328.

If port handling and fobbing expenses of $25/tonne are excluded, net realisation to FCI is $(315-25) = $290/mt, which is close to today's CBOT (Chicago Board of Trade) March futures. All transit/port handling shortages and demurrages are to the account of FCI — which may work out to a minimum of 2 per cent — reducing the net accrual to FCI by another $6/tonne or $284/tonne as of

today.

Generally wheat prices retreat by JuneJuly every year, when Northern hemisphere crop (the US, EU, Black Sea, Canada) is harvested. Tenders formalised during December 2012–early January 2013 through three PSUs point to a declining pattern.

Egypt, the world's biggest wheat buyer, is staying on the sidelines both due to its internal compulsions and expects

stocks, rising fiscal deficit, and high degree of wastages.

The world is not waiting for India to sell wheat at its own speed — but surely awaiting and anticipating a fall in prices. Recall that in July 2012, highest bids for Indian wheat were received at $228 fob and other bids ranged $200-$225. Should that situation re-emerge internationally, Indian wheat will have to be traded

prices to plunge.

EXCESS STOCKS Indian wheat export needs to attain maximum momentum in the next six months — January to June 2013. And from April 2013, wheat will start flooding Indian mandis, creating a crisis of plenty with no safe storage space.

The monsoon in July-September can damage poorly stored grains in kuchcha CAP arrangements. If Government agencies don't move quickly, they will be saddled with huge

around Rs 12540/tonne — below MSP of Rs 12,850/tonne of 2012-13 and almost Rs 7,000 below economic cost, with massive subsidisation.

Wheat of 2010-11, 11-12, 12-13 — that is old grains and new grains — be offered at differential pricing both to private and public sector. Private sector can make upfront pre-shipment payments at district HQs of FCI v/s post shipment payments remitted by PSUs with a lag of two-three months.

The entire performance risk, including

transit and handling shortages of 2-2.5 per cent, will be on the private trade, rather than that of FCI. Simultaneously, domestic traders can blend old/new grains at the port and price them intelligently for greater penetration in the markets directly or in formal association with PSUs. FCI disposes old/damaged wheat through domestic tenders in three types of feed categories in price range of Rs 5,000-7,000/tonne and for industrial use (distillery) at Rs 3,850/tonne.

Export realisation can be much better than these values even for older wheat.

The Government should have no hesitation in acknowledging lower prices for old wheat as a pragmatic solution to create much-needed storage space.

There could be a question in the coming years on prioritising shipments of the best quality wheat of Madhya Pradesh and Punjab, while burdening the exchequer with old wheat, which bears a carrying cost of Rs 5,000 per tonne for two years. There is a great demand for general purpose/feed wheat, where shipments of old crops will be appropriate.

The net effect of reframing the export guidelines would be (a) exchange earnings can reduce pressure on restricting gold imports which may create a parallel market; (b) higher volume of wheat export can be attained by the immediate involvement of private sector for warehousing bumper wheat crop of 2013-14 (c) money blocked in old inventories can be encashed and fiscal and current account deficits reduced and (d) will save the Government from adverse criticism of

Beverages & Food Processing Times-Jan-I-2013

Think beyond self-sufficiency

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ndia was the world's largest exporter of rice this past calendar year. It exported 9.5 million tonnes of rice, well above traditional market leader Thailand. India was also the world's largest exporter of buffalocum-beef. It was a significant exporter of sugar, cotton and lesser known farm products like guargum and oilseed meal. These figures do not include the billions of dollars of agricultural material that is smuggled across borders. In the last fiscal year, India shipped out $20 billion more agricultural products than it shipped in.

All this may baffle many Indians.

There is a mindset that assumes this is a nation of perpetual food scarcity, incapable of generating surpluses.

There will also be surprise that India is exporting anything when food inflation is running at double digits. And India remains deficit in many areas. It imports nearly half of its cooking oil requirements and scours the globe every year for legumes and pulses to give its people their daily dal. It is among the world's five largest producers of poultry, eggs and dairy products but consumes everything it makes and more. What India has learnt in the past decade is that agricultural exports are an essential part of its food security. Food prices are largely driven by the cost of farm inputs like oil, gas and land. For farmers to make the necessary investments to keep increasing their yields, they need to sell at profitable prices. India has two ways to ensure that farmers get that price - a politically determined and fiscally unsound minimum support

price or market-based and profitable exports. The latter is obviously the better option. In addition, food prices in India are increasingly determined by global benchmarks. When India exports rice or sugar, it helps depress the world price which, in turn, keeps down domestic food inflation.

Perhaps most important is that the

returns from exports, and the concomitant corporatisation of farming, have helped put an end to the chronic shortages that afflicted the industry. And nothing drives up prices or causes social pain as much as simple lack of supply. Cotton, for example, is a farm sector transformed by Bt technology, capital investments and exports. Production has boomed and prices have fallen - last year they dropped 17%. The same could happen with sugar or dairy if state governments were prepared to free them from nonsensical market restrictions and allow the private sector more leeway. The other side of modern food security is to guarantee overseas supplies for foodstuffs India is unlikely to ever produce enough of. Thus pulses are probably best left to vast, machine harvested drylands in Canada and the United States. Food security today is not about self-sufficiency, it is about recognising that food is a global commodity and being a major force in that market.

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World's top banana producer aims for higher export presence

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ndia may take the top spot for world banana production but poor postharvest practices are cutting the Asian nation short on a global level.

In India's top banana producing zone, Tamil Nadu, about 30% of production goes to waste, said R. Dinesh, chairman of the Confederation of Indian

Indian National Agriculture Council co-chairman Salil Singhal recently explained the importance of establishing better practices at the Tamil Nadu Banana Festival.

“The demand for fruits and vegetables in the country and abroad is growing at a phenomenal rate. But here, the postharvest handling of produce is poor,” Singhal was quoted as saying in The Hindu.

“The cold chain has to be an integral part of the supply chain to ensure good quality, and it is essential for us to set up state-of-the-art cold chain infrastructure in the country.”

In 2010, India produced 29.8 million MT of bananas, according to the Food and Agriculture Organization (FAO) of the United Nations (UN). The nation comfortably outranked the next top producer, China at 9.8 million MT. Despite quantity, India suffers when it comes to controlled handling.

The Hindu reported that only 2% of Indian produce goes through controlled handling, in contrast to 85% in Europe and the United States.

Postharvest losses for fruits and vegetables in India add up to an estimated US$16.8 billion, the BBC reported.

Industries (CII) Tamil Nadu State Council in The Hindu.

Losses are attributed to lack of farmer quality-control training, inadequate facilities for cold storage and transportation, and poor marketing.

Making a plan In December, CII released a feasibility report to set up a cold supply chain for Indian bananas.

“It is imperative that a cold chain for banana supply chain be started in the state of Tamil Nadu. A pilot project should be undertaken in one of the high-density immediately, and Tiruchirappalli (Trichy) should be considered a pilot location for this initiative,” the report stated.

The BBC reported that CII's plan has its eye on improving exports to China, East Asia, the Middle East and Europe.

CII estimated annual trade could be worth US$1.2 billion and is confident that within 18 month, its banana plan would succeed.

Organization chairman of the National Cold Chain Task Force, B. Thiagarajan, said in the BBC, if postharvest losses were avoided, India could export 28 million MT of its 29.8 million MT output.

US tightens food safety rules to prevent foodborne illness

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ashington: The US has proposed stringent food safety measures on both domestic and imported foods to prevent contamination of processed food, which has been a cause of illness of tens of thousands of Americans in recent years.

The new rules, when enforced, is expected to have considerable impact on import of processed foods in particular to that of countries like India, which officials feel, are lacking in the highstandards of food processing in the US. The first proposed rule would require makers of food to be sold in the US, whether produced at a foreign- or domestic-based facility, to develop a formal plan for preventing their food

products from causing foodborne illness.

It would also require them to have plans for correcting any problems that arise.

America`s Federal Drug Administration also proposed enforceable safety standards for the production and harvesting of products on farms.

This rule proposes science- and riskbased standards for the safe production and harvesting of fruits and vegetables.

The burden of foodborne illness in the United States is substantial, federal officials said. One in six Americans suffer from a foodborne illness every year. Of those, nearly 130,000 are hospitalized and 3,000 die from their illness.

Preventing foodborne illnesses will improve public health, reduce medical

costs, and avoid the costly disruptions of the food system caused by illness outbreaks and large-scale recalls, FDA said.

The proposed rules are part of the effort to implement the landmark, bipartisan FDA Food Safety Modernization Act. "The FDA Food Safety Modernization Act is a common sense law that shifts the food safety focus from reactive to preventive," said Health and Human Services Secretary Kathleen Sebelius.

"With the support of industry, consumer groups, and the bipartisan leadership in Congress, we are establishing a sciencebased, flexible system to better prevent foodborne illness and protect American

families," she said.

The FDA is proposing that larger farms be in compliance with most of the produce safety requirements 26 months after the final rule is published in the Federal Register.

Small and very small farms would have additional time to comply, and all farms would have additional time to comply with certain requirements related to water quality.

"The FDA knows that food safety, from farm to fork, requires partnership with industry, consumers, local, state and tribal governments, and our international trading partners," said FDA Commissioner Margaret A Hamburg.

Beverages & Food Processing Times-Jan-I-2013

Nagaland chosen for Krishi Karman Award

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agaland has been selected by the ministry of agriculture and food processing industries, government of India, for the Krishi Karman Awards 2011-12.

Nagaland will be presented the award for the Best Performing State in overall food grain production among Category-III states. Union minister for agriculture & food processing industries Sharad Pawar conveyed this message in a letter to Nagaland CM Neiphiu Rio. Category III is a status mainly for states whose annual food grain production is less than one million tonne. The award includes a trophy and cash amount of Rs 2 crores.

The letter read: "I am pleased to inform you that the Krishi Karman Awards for 2011-12 have been finalized and Nagaland has been selected as the Best Performing State in overall food grain production among Category-III states (whose annual total

food grain production is less than one million tonne).

"I would like to congratulate you, your agriculture minister and the officials of the state agriculture department for their dedicated efforts in supporting farmers with technologies and services that has enabled your state to achieve this milestone."

Sharad Pawar informed that the awards

would be presented by the President of India on January 15 at New Delhi, and requested the CM to make it convenient to attend the function and receive the award along with the state agriculture minister.

Food processing centre for RINPAS female patients

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food processing centre for female patients with a view to make them self-reliant was launched in early December at Ranchi Institute of Neuro Psychiatry and Applied Sciences (RINPAS).

RINPAS director Amul Ranjan said, "We have launched this programme in early December so that female patients are able to earn a livelihood for themselves when they leave the institute. By this, the perception of the society will also change towards such patients.

Earlier we had launched this programme at a small scale but this time we have planned it more professionally."

A few days ago, the female patients got training in food processing at Birsa Agricultural University. "We have lots of trees like mango, tamarind and litchi

on our premises which can be utilized for making pickles and jams. Earlier the inmates made three quintals of mango pickles which made us hopeful that they can also be given professional training. This time, they will learn packaging after which they will receive a training certificate. All this is part of the rehabilitation programme for the patients," said Ranjan.

On some future plans, the director said they were in talks with the government to coordinate in supplying the products made by the female patients.

"We would like to negotiate with the government on the products being supplied initially at the Sadar hospital and the Rajendra Institute of Medical Sceinces. Later it can be supplied elsewhere with the help of the government," he said.

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Rise in wheat MSP increases food ministry's cost by 5%

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he food ministry's economic cost of wheat — the amount incurred in procuring and storing the grain — is set to rise by five per cent to Rs 19,147 a tonne, with the increase in the minimum support price (MSP) of the grain, an official said.

Last month, the government had raised wheat MSP by Rs 65 to Rs 1,350 a quintal for the 2013-14 marketing year (April-March).

“The hike in wheat MSP will also lead to a rise in the economic cost of procuring and storing the grain. It will now rise to Rs 19,147 a tonne in 201314 marketing year from Rs 18,225 a tonne in the 2012-13 marketing year,” a ministry official said. The Centre had procured 38.15 million tonnes of wheat in 2012-13 rabi marketing year — 10 million tonnes more than the procurement made in the 2011-12 marketing year.

“With a higher MSP, conducive weather and progress in sowing, the procurement of wheat is expected to rise. Already rice procurement is expected to touch 40.13 million tonnes in 2012-13 marketing season (October-

September) and this will lead to a rise in the food subsidy Bill,” the official added.

The food ministry has already sought an additional Rs 14,300 crore during this financial year for rice procurement in the 2012-13 marketing season.

Another food ministry official said with the rise in MSP and other incidental costs involved in procurement, the economic cost of wheat and rice procured by public agencies had been increasing.

“As the central issue price ( CIP) remains unchanged, the gap between the economic cost and CIP, which is borne by the Centre, as food subsidy has been rising,” the official added.

CIP is the rate at which the central government issues foodgrains for the Public Distribution System (PDS) to states and union territories.

The Centre incurred an expenditure of Rs 72,370 crore on food subsidy in 2011-12 and in the current financial year, out of the total allocation of Rs 74,552 crore it has spent Rs 61,259 crore till December 15, 2012.

More than 177 Lakh Tonne Rice Procured

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he Government agencies have procured 177,18,657 lakh tonne rice during ongoing Kharif Marketing Season (KMS), 2012-13. As per data made available to the Ministry of Consumer Affairs, Food and Public Distribution, total rice procured till 04.1.2013, during current KMS, is 212762 tonnes more than the rice procured during the corresponding period of previous season.

Highest procurement has been made in Punjab, i.e. 85,56,984 tonne followed

by Haryana 25,83,216 tonne,

Chattisgarh 23,41,456 tonne , Andhra pardesh 17,18,052, Odisha 9,55,763 and Madhya pardesh 4,55,659 also made significant procurement.

India is world's biggest rice exporter

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ndia has emerged as the world's largest exporter of rice this year.

The country that has dominated the

trade for 30 years, Thailand, lost its status as the world's top rice exporter in 2012 as a controversial scheme to boost farmer incomes saw it overtaken by India and Vietnam, an industry group said.

Thailand exported 6.9 million tonnes of rice last year, falling behind India which shipped 9.5 million tonnes and Vietnam which sold 7.8 million tonnes overseas, according to the Thai Rice Exporters Association.

Thai exports slumped 35% from the 2011 level of about 10.6 million tonnes, based on the group's figures.

“We had been the champion since 1980, for 31 years, but we lost the top spot in 2012,” the group's honorary president said.

Beverages & Food Processing Times-Jan-I-2013

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There is no quality concern about Indian wheat: Food Secy

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mid reports that Iran has some quality problem in importing wheat from India, the government said there is no concern over the quality of Indian wheat and the country is exporting the grain at a good price.

"There is no issue on quality of Indian wheat which is being reflected from the price we are getting in exports," Food Secretary Sudhir Kumar told reporters when asked about the progress made in discussion with Iran for wheat exports.

In the first tender, the government has got a price of USD 296 per tonne and in the last tender, the price has reached USD 328 per tonne, he said, adding that about 11-12 foreign firms are participating in the global tenders.

In July this year, the Centre had allowed exports of two million tonnes of wheat from its godowns to offload surplus stock and ease storage crunch.

The tenders are being floated by the state-owned trading firms PEC, STC and MMTC on behalf of the

government.

"Iran has not communicated to us about quality specification so far. Once they do it, we will take a call," the secretary

wheat since 1996 due to quality issues.

Early this year, the sanction-hit West Asian country had shown interest to buy Indian wheat and had also sent its

informed.

Iran has not been importing Indian

team to check quality of the grain.

However, the negotiations have not yet

fructified.

Asked whether entry of Australian wheat in the global market would hit country's export realisation, Kumar said: "There is shortage internationally.

Anyway, our main objective is to manage foodgrains stock and not maximise price realisation".

Wheat production of India, the world's second largest producer, touched a record 93.9 million tonnes in the 201112 crop year (July-June) leading to a bumper procurement.

The Food Corporation of India's godowns are overflowing with foodgrains stocks, prompting the government to lift ban on exports in September, 2011.

From July this year, it even permitted exports of 2 million tonnes from FCI godowns and the allocated quantity is on the verge of getting exhausted. Now, the government is in the process of allowing an additional 2.5 million tonnes of exports.