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Vol. 6, Issue 7, December (I) 2013, Rs. 20/-

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Over Rs 1.34 Lakh Cr Food Processing Industry will benefit from GST Allocated in 12th Plan Sharad Pawar to Dept. of Agriculture and Cooperation

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or the XII Five Year Plan Period (2012-17), an outlay of Rs.1,34,746 crore has been approved. Rs.17,868.32 crore and Rs.21,609 crore have been provided during the years 2012-13 and 2013-14, respectively. Actual expenditure incurred during the year 2012-13 was Rs.17,730.72 crore. During 2013-14 and expenditure of Rs.13000 crore (approximately) has been incurred so far. An amount of Rs.61,527.90 crore was allocated for all schemes (around 50) during XI Five Year Plan period viz.2007-12. An expenditure of Rs.61,065.28 crore was, however, incurred during the said period. For the XI Plan period, a target of

Tariq Anwar

additional food-grain production of 25 million tonnes was fixed. The achievement has surpassed the target. For the XII Plan period again a target of additional foodgrain production of 25 million tonnes has been fixed. The target of agriculture growth rate fixed for XI Plan period was 4%. However, the achievement has been 3.64%. For XII Plan period, a target of 4% growth in agriculture sector has been fixed. The schemes have been very successful in increasing the foodgrain production. During 201112, the food-grain production was 259.32 million tonnes, which was a record production. During 201213, the food-grain production has been 255.36 million tonnes despite

drought in some parts of the country. Despite natural calamities like flood, cyclone in some parts of the country, the food-grain production during 2013-14 is targeted at 259 million tonnes. Department of Agriculture and Cooperation is currently implementing a number of schemes for the development of agriculture in the country. Government has decided, in principle, to restructure these schemes into five Missions, five Centrally Sponsored Schemes and one State Plan Scheme in order to have more focused approach. This information was given by Minister of State for Agriculture and Food Processing Industries, Shri Tariq Anwar in a written reply to Rajya Sabha questions.

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he implementation of the proposed goods and services tax (GST) will help the processed food industry, which is facing several challenges due to existing tax regime, agriculture minister Sharad Pawar said. He also said that state-level reforms should be taken up to make the non-alcoholic beverage sector globally competitive. “The processed food industry has some issues with existing tax structure. ... I am hopeful that the implementation of

the proposed single GST will be beneficial for this sector,” Pawar said while releasing an Icrier report on food processing industry in India. The Icrier report has made recommendations for major reforms for improving global competitiveness of Indian nonalcoholic beverages sector. Claiming that food and beverages account for 30 per cent of India’s consumption compared to 25 per cent in China or 17 per cent in Brazil, the report said that with rising income levels, there is a shift towards packaged food and beverages, something which can worked upon given the abundant supply of raw material like fruits and vegetables. Pawar said that in the nonalcoholic beverages sector, major players are planning to invest around $10 billion by 2020.


Beverages & Food Processing Times - December - I - 2013

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Beverages & Food Processing Times - December - I - 2013

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iraj Hussain, secretary, Ministry of Food Processing Industries urged the industry to collaborate with Universities, and institutions to promote skill development of professionals in the food processing sector to equip the sector adequately to deliver the huge task of understanding and implementing food safety regulations. He also informed that three food parks to come in Punjab, Kolkata and Bangalore in the next 6 months. Already two food parks are operation in Patanjali and Chittoor. Inaugurating the National Food Safety and Quality Summit, organized by CII in the capital, Mr Hussain highlighted the need for creating awareness about the evolution of food safety standards and regulations among people and professionals. Right now, the organized private sector is most articulate about the implications of new regulations on business development that are being brought about by FSSAI. The larger concern is around product approval process which to the industry is cumbersome and is likely to slow down their progress with new products. Hussain pointed out that it important for the public sector organization to start obtaining approvals and complying with the food safety regulations and hence seek the cooperation of the private sector to do the same. The Ministry of Food Processing Industries has been encouraging investments in this sector, incentives for cold chain development and also grant-in-aid for setting up laboratories that are equipped for testing food products as per the new regulations. He re-emphasized the need to boost skill development of professionals to be able to take advantage of the food safety standards and regulations and usher the industry on a higher trajectory that is compliant with global practices and standards. Lastly, on post-harvest losses, he pointed out that despite differences in estimates, it is important that both government and private sector come together to address the situation and contain losses. He commended CII for organizing a multi-stakeholder platform to deliberate on the issues related to food safety, its criticality for ensuring food safety for consumers and implications for the industry. Sanjay Dave, Adviser FSSAI & Chairperson, Codex Alimentarius Commission, in his Keynote Address pointed out that with consumers rapidly moving towards safe foods, standards and regulations have to be made effective. He

Food Processing News

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Siraj Hussain urged industry to collaborate with Universities, and institutions to promote skill development

informed that Horizontal standards (such as additives, contaminants) are likely to be issued by July 2014. .Harmonization of Indian standards with Codex will be a landmark achievement in the food processing sector. Dave, pointed to the fact that while agricultural and food sectors have come a long way in expanding production, value added products, and exports, there is a long way to go. He emphasized that the efforts to harmonize Indian food safety standards with Codex (global standards) will provide the much needed fillip to food processing industry. Going forward, setting up of horizontal standards will ease out product approval process. He mentioned the need to disseminate good practices across the value chain (related to procurement, storage, distribution, farm management, etc). He mentioned that currently gap analysis of 72 public laboratories is underway. With a corpus of Rs 800 crore (which is about 75% of the cost of upgradation of laboratories), existing laboratories are being upgraded and 33 new facilities are being put in place taking the number of modern laboratories to 105 in the country. According to Sanjay Dave, multistakeholder collaboration will be important to bring about a better and effective food safety standards and regulation environment in the country. He appreciated the work done by CII in organizing capacity building and training workshops across the country and importantly continuing to provide a platform to deliberate on the key issues. Vivek Bharti, chairman, CII National Taskforce on Food Regulatory Affairs & Executive Director PepsiCo India Holdings Pvt Ltd in his Theme Address recognized the key role played by the promoter Ministry (Ministry of Food Processing Industries) and FSSAI as the regulator. He mentioned that while the Food Processing Industry has benefited from rapid globalization in 1990s (FDI coming in which resulted in ushering in of capital and technology to boost food processing capacities in India), the sector has a long

way to go to make a mark as a global player. The partnership between the industry and the government has been instrumental in deliberating on key issues related to food safety and standards and its implications for the growth of the sector and going forward, the consultative process will help resolve issues and concerns. He emphasized on the need for the Indian industry to be globally competitive and assured that the industry is united towards one goal “food safety for consumers”.

Bharti put forth that science should be the bedrock of any food safety standard or regulation. Continuing its tradition of Recognition and Reward and to provide a platform to share Industry best practices and leveraging opportunities for “Collaboration for Coproduction for Food Safety and Quality, the

Confederation of Indian Industry’s Food And Agriculture Center of Excellence (CII-FACE) kickstarted its 2 day Summit (3-4 December 2013) at Hotel Lalit, New Delhi. The conference will be followed by CII National Food Safety Awards on Dec 3rd at the glittering Awards Night.


Beverages & Food Processing Times - December - I - 2013

Dairy News

State Signs Pact to Boost Dairying in Vidarbha

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he state government signed two memoranda of understanding with National Dairy Development Board (NDDB) at Vidhan Bhavan. They are part of chief minister Prithviraj Chavan’s initiative to usher in a ‘white’ revolution in the state, by boosting milk output in backward regions of Vidarbha and Marathwada where agriculture is not sustainable and farmers badly need to supplement incomes through allied activities. Chavan and NDDB chairperson Amrita Patel signed the agreements that would enable the state to use expertise and marketing machinery of NDDB to set up new-generation cooperatives on the famous Anand model. While several relief packages offered by the Centre

as well as the state in past took steps in this direction, the results were not encouraging because the two regions did not have strong cooperative movement to carry the milk business forward. The Mother Dairy Fruit and Vegetable Ltd, which is a dairy services wing of the NDDB, will be tasked with setting up the necessary infrastructure that is to include improving cattle breeds, providing mobile artificial insemination units, creating milk producers cooperatives and marketing structure. Ms Patel and Chavan were confident the two regions would gain immensely from the pacts. The second MOU relates to handing over of the existing government dairy in Nagpur to NDDB. The

government will give it the plant with 9.88 acre land on a 30-year lease. NDDB is expected to pump in Rs 50 crore for modernization and setting up infrastructure all over Vidarbha. Similarly, at Gove Bhivandi village in Thane district, the state will give to NDDB 19.5 acres land for setting up a latest state-of-the-art processing plant with investment of Rs 150 crore. “This is a major step-forward for Vidarbha region where dairy development could not take place despite several attempts,” said EGS minister Nitin Raut who was also present at the signing along with cooperatives minister Harshvardhan Patil, dairy development minister Madhukar Chavan and minister of state Sanjay Savkare and top officials of the government. Raut, who held the dairy ministry earlier, had played a crucial role three years ago in the planning process that has taken proper shape now. “This tie-up with NDDB will benefit Vidarbha farmers in the long run. Farmers who participate in dairy movement will earn additional income providing relief from uncertainties in dryland farming,” said Raut.

IFC Provides $15 Million Loan to Parag, Supports Small Dairy Farmers in India

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FC, a member of the World Bank Group, is providing a $15 million loan to dairy company Parag Milk Foods for expanding its milk processing facilities, to enhance dairy farm productivity and boost incomes in rural India. With IFC’s investment, Parag will expand supply chain linkages across over 50,000 farmers and food suppliers and improve food safety standards. It will also create more jobs, especially for women in the town of Manchar in Pune district in the state of Maharashtra where one of Parag’s plants is located. The loan will assist the company in expanding its portfolio to more value-added products like whey powder and ultra-high temperature milk. “IFC’s global knowledge and expertise in the dairy sector will help the company develop best practices to increase milk yields, adopt environmental and food safety standards and upgrade technology and operational practices,” said Devendra Shah, Chairman and Managing Director, Parag Milk Foods. “The

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Amul Dairy Receives CII National Food Safety Award

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he Kaira District Cooperative Milk Producers’ Union Limited (KDCMPUL) popularly known as Amul Dairy has received the CII National Award for Food Safety 2013 for its outstanding performance in the dairy sector manufacturing, large food business category. The award was received by Dr K Rathnam, general manager (operations) of Amul Dairy in a recently held function at New Delhi in presence of national and international dignitaries. The national award for food safety was instituted by the Confederation of Indian Industry (CII) to promote internationally benchmarked best practices on food safety. Besides, global standards and Indian regulations on food safety systems, the model includes assessment of social compliance and organisational improvement initiatives. “Amul Dairy was audited by a high level of team before declaring the award which

found the overall effectiveness of the deployment of Amul Dairy’s food safety infrastructure, manufacturing practices, backward integration and consistent quality to be exemplary and worthy of emulation,” a release from Amul Dairy mentioned. In past, the Anand-based Amul Dairy has received several awards including the G D Birla Award for outstanding contribution to rural upliftment, Sahakari Vikas Ratna Award, National Energy Conservation Award and National Productivity Awards. “Amul Dairy has even taken the quality movement to its grass root operations like primary dairy cooperatives to get these systems conformed to international quality management systems in additions to its entire operations which is unique to the dairy world. Amul continues to innovate and implement the best management practices to delight its consumers continuously,” the release further said.

IRMA, OIL to Develop Dairy Sector in Assam

T project will benefit dairy farmers, a critical link in the company’s supply chain.” The financing will also improve Parag’s operational efficiency through plant automation, and expand its procurement and distribution networks. Parag distributes its products through 60 super-stockists, 1,000 distributors and over 120,000 retail outlets across India. “Dairy is a major source of income for a large population of rural India. IFC works with supply chain integrators to provide small farmers and rural businesses access to finance, access to markets, advice and extension services,” said Serge Devieux, IFC Director for South Asia. “IFC’s support to Parag will

help create direct and indirect jobs and boost growth of small and medium enterprises.” Globally, IFC invested $4.5 billion across the agricultural value chain in 2013. IFC’s agribusiness strategy aims to promote inclusive growth and environmental and social sustainability in agricultural supply chains. Parag has a milk processing capacity of around two million liters per day at its two plants in Maharashtra and Andhra Pradesh. The company has a well-diversified product portfolio ranging from liquid milk to value added products like cheese, ghee, paneer, butter, dairy whitener and yogurt.

he Institute for Rural Management, Anand (IRMA) will conduct a feasibility study for Oil India Ltd (OIL) to explore the possibility of venturing into dairying in Assam. A memorandum of understanding (MoU) was signed in this regard. OIL had approached IRMA for conducting the study in the districts of Dibrugadh and Tinsukia in Assam. The study is expected to pave the way for a roadmap and a long-term vision plan focusing on the prospects of developing a cooperative dairy development project in these two districts. The work is expected to stimulate employment and infrastructure supporting the processing, procurement, and marketing of milk in a cost-effective way. It will focus on improving the social, nutritional and economic status of residents in and around OIL

operational areas. The feasibility study will focus on quantitative, qualitative and participatory methods of inquiry where secondary data will be collected from various sources. This would help IRMA’s research team to identify dairying as an alternative source of livelihood. The MoU was signed by IRMA director Prof Jeemol Unni and general manager (administration and public relations) for OIL N R Deka in the presence of Gujarat Cooperative Milk Marketing Federation managing director R S Sodhi. OIL had earlier announced that it planned to take up the ambitious project ‘Kamdhenu’ to organise the dairy sector in its operational areas. It is essentially a corporate social responsibility project as the north-east India is a milk deficit region.


Beverages & Food Processing Times - December - I - 2013

Dairy News

Increasing milk exports can cause volatility in domestic prices: Dairy board chief W

hile increasing milk exports can give higher returns in some years, fluctuations in global supply and demand could lead to substantial volatility in prices back home, felt Amrita Patel, chairperson of the National Dairy Development Board(NDDB). As our dairy sector integrates itself increasingly with the global one, the volatility in international markets is likely to be transmitted to a large extent to our domestic market, the chairperson said. She added, “I fear that all too often when we think of our position in the global market and the steady growth in our milk production, we see ourselves as growing exporters of dairy commodities, and believe this could also improve returns to our milk producers. While this may be so, we need to appreciate that pursuing this path without ensuring that the domestic market is met would result in competition between the domestic and export markets and an increase in prices for domestic consumers.” She claimed the rise in feed costs from an increase of nine per cent in 2011-12 to 27 per cent in 2012-13 is also leading to higher production costs and therefore higher milk prices. At some stage, the rise in price of milk could erode the ability of many families to purchase milk. About seven per cent of total world milk production is traded. Developed countries account for about three-fourths of exports and developing countries account for about three-fourths of the imports. Currently, the organised sector handles only about 30 per cent of the marketable surplus. Patel feels in the interest of both producers and consumers, it is necessary to increase the share of the organised

sector comprising cooperatives, producer companies and private companies. The National Dairy Plan has set this target over the next 15 years at 65 per cent. “But to achieve this, private companies would need to collect milk directly from producers as is being done by cooperatives and producer companies. Alternatively as is the case abroad, private companies need to explore sourcing their requirement of milk from cooperatives and producer companies.Further, since the sale of liquid milk is likely to contribute to much of the trade in milk in India for quite some years, private companies need to enter the liquid milk market in addition to marketing products,” Patel said. She mentioned that in future it would be desirable that the private sector and cooperatives work together to ensure that exports take place after meeting the domestic demand of both. If a higher price needs to be paid to match export prices, then this should be paid, said Patel. Meanwhile, she also said that the growth in milk production in our

country, as reflected in the rate of inflation, appears to be satisfactory when compared to other protein foods like eggs, meat and fish. The per capita availability of milk of 290 gm per day is slightly more than world average. According to Patel, over the last five years, India’s milk production has increased by about 25 million tonnes compared to an increase of about 6.6 million tonnes in the US, 5.4 million tonnes in China, 2.7 million tonnes in New Zealand and 1.6 million tonnes in the EU.

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Beverages & Food Processing Times - December - I - 2013

Agri Business News

Global buyers bid for Indian wheat at higher than floor price

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he three wheat tenders floated by State trading entities PEC Ltd and MMTC have evoked good response. The tenders, for exports totalling of 2.1 lakh tonnes, were opened. Almost all the 22 bids were priced above the floor rate of $260 a tonne. The buyers included global players Phoenix, Emmsons and Cargill. Thailand-based Phoenix Commodities put in the highest bid price of $287.10 a tonne for the 35,000 tonnes of wheat offered by PEC Ltd from Vizag port. PEC received six bids for wheat, offered from Food Corporation of India’s godowns in Vizag port. The bid prices ranged from $272.35 to $287.10 a tonne. Emmsons International made the highest bid at $285.41 for the 1.2 lakh tonnes wheat offered by PEC from Kandla port.

For this tender, PEC received 10 bids ranging from $265-285.41 a tonne. Phoenix also emerged as the highest bidder for the 55,000 tonnes of wheat offered by MMTC from Pipavav port. Phoenix quoted a price of $283.1 a tonne. MMTC received six bids ranging from $265.75 to $283.1 a tonne for its tender. Growing interest The rise in the number of bids from global buyers indicates the growing interest in Indian wheat in the current market scenario as supplies from Russia and Ukraine are seen dwindling with the onset of winter. Wheat offered through these tenders have to be shipped between December 22 and January 25. Tenders for export of another 4.4 lakh tonnes of wheat will be

USDA sees fall in India’s rice output, exports this year: Report

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ndia’s rice output is likely to decline to 103 million tonnes in 2013-14 on crop damage and exports are also expected to be lower at 10 million tonnes, a latestUSDA report says. The likely crop damage has pushed up domestic rice pricesstrongly in November and this has been a major concern for the government, which may liquidate rice stock in the local market to check prices ahead of general elections, it said. The US Department of Agriculture (USDA) said: “Rice production has been lowered to 103 million tonnes (from 105 million tonnes) as the recent cyclones in the eastern coast and heavy rains have damaged the standing rice crop, which was at

maturity and harvest stage, in eastern and southern states.” Harvesting in the rain-affected areas have been significantly delayed as the mechanical harvesters are unable to operate due to wet soil conditions, it said. Although no official assessment of crop loss due to the recent cyclones and heavy rains is available, market sources report crop loss in the affected areas of around 3 million tonne, it added. Despite some drop, India’s rice output would be it third highest crop ever, it said. The country had achieved an all-time output of 105.30 million tonne in 2011-12 and the second highest crop of 104.40 million tonne in 2012-13.

opened on December 16 and 23. State entities PEC, MMTC and STC have floated tenders for 6.5 lakh tonnes of wheat for export this month as pressure builds up on the Government to create storage space for the new crop. Agriculture Minister Sharad Pawar said the country was heading for a record high production of foodgrain this year. In the earlier tender, opened on November 18, buyers had quoted prices up to 10 per cent higher than the floor price of $260 a tonne, largely in line with the prevailing global prices. Trimming surplus The Government has decided to ship out about two million tonnes of wheat to cut surplus stocks and create space for other cereals, such as rice, for which paddy procurement is currently on in Punjab and Haryana. On December 1, India’s wheat stocks stood at 31 million tonnes, three times the mandated quantity for the October-December quarter. The State entities had exported 4.2 million tonnes of wheat, valued at $1.4 billion, in fiscal 2012-13. The average price fetched by Indian wheat last fiscal was $311.38 a tonne. On impact of likely output fall on prices, the USDA said: “Domestic rice prices have gained strongly in November on reports of crop damage in Andhra Pradesh and other eastern state. Rising domestic rice prices over the last few months has been a major concern for the government.” “With the Parliamentary elections due in next five months, the government may liquidate its ‘more than sufficient rice stocks’ to contain any further increase in domestic prices,” it said. Prices of common variety rice in India rose to Rs 29,000 per tonne level last month, from the below Rs 24,000 per tonne in the same period last year, USDA data showed. On rice exports, the USDA said the outbound shipments are expected to decline to 10 million tonnes in the 2013-14 marketing year (October-September), from the estimated 10.9 million tonnes last year. Noting that sowing of rabi (winter) rice, has started and will continue through December, the USDA said, “Assuming normal weather conditions, higher rabi rice production is likely to partially offset the recent crop loss.” Planting of rabi rice, mostly confined to West Bengal and southern states, is likely to be higher than last year on improved soil moisture, augmented water levels in irrigation reservoirs and relatively firm domestic prices, it said.

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National Crop Insurance Programme being Implemented from Current Rabi Season

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new central sector scheme, ‘National Crop Insurance Programme’ (NCIP) has been introduced by merging Modified National Agricultural Insurance Scheme (MNAIS), Weather Based Crop Insurance Scheme (WBCIS) and Coconut Palm Insurance Scheme (CPIS) throughout the country from Rabi 2013-14. Administrative Approval for implementing NCIP from Rabi 2013-14 has been issued on 1st November, 2013. NCIP has been introduced to provide financial support to the farmers for losses in their crop yield, to help in maintaining flow of agricultural credit, to encourage farmers to adopt progressive farming practices and higher technology in Agriculture and thereby, to help in maintaining production, employment & economic growth. Besides, farmers are also benefitted due to: • coverage of indemnity for prevented sowing/planting risk and post harvest losses (due to cyclone in coastal areas), • higher level of indemnity and more proficient basis for calculation of threshold yield, • faster settlement of claims due to provision for making 50% advance of likely claims under MNAIS

component for immediate relief to the farmers, etc. • To encourage the State Governments to implement the scheme at village/ village panchayat level, a provision to reimburse 50% of incremental expenses on Crop Cutting Experiments has been made in the scheme. Unit area of insurance has been reduced to the village/ village panchayat level in the restructured scheme of ‘National Crop Insurance Programme’ (NCIP). Continued efforts are made to create awareness about crop insurance schemes by the implementing agencies in coordination with implementing states. The salient activities under awareness campaign, involve the publicity of features & benefits of the scheme through advertisements in leading National/local News Papers, telecast through audiovisual media, distribution of pamphlets, participation in agriculture fairs / mela / gosti , organization of workshops/ trainings and SMS through Kisan Portal etc. This information was given by Minister of State for Agriculture and Food Processing Industries, Shri Tariq Anwar in a written reply to Lok Sabha questions.

Food grains output may touch new record in 2013-14

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ndia’s foodgrains production this year is likely to break the previous record of 259.29 million tonnes achieved in 2011-12 if weather remains favourable through the ongoing rabi season, Agriculture Minister Sharad Pawarsaid. The country had harvested a record 259.29 million tonnes of foodgrains in the 2011-12 crop year (July-June). However, the output fell marginally to 255.36 million tonnes last year due to drought in some parts of the country. “This year, infact, we will break the last time’s record. I am confident if nature continues to be cooperative, we will break last time’s record,” Pawar told reporters on the sidelines of a fertiliser event here. Pawar said the recent review of sowing of rabi (winter) crops, which is under way, shows that wheat acreage so far is much higher than it was last year. Similarly, the sowing performance of rabi paddy, pulses, oilseeds and cotton is also good. The acreage of sugarcane

is also more than last year, he added. As per the official data, wheat has been sown in 214.07 lakh hectare till last week, up from 183.42 lakh hectares in the same period last year. Barring coarse cereals, acreage under other rabi crops remained higher than the last year. The country grows foodgrains both in the Kharif (summer) and rabi (winter) seasons. The Kharif crops, which largely includes paddy, are being harvested now. As kharif crops are cleared off the fields, farmers are sowing rabi crops, which has began from October onwards. Rabi crops will be ready for harvest in April 2014. India’s Food Security Act entitles 82 crore people to 5 kg of foodgrains per person a month at Rs 1-3 per kg. The country needs 62 million tonnes foodgrains a year to implement the law. Some states have started rolling out the scheme.


Beverages & Food Processing Times - December - I - 2013

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Beverages & Food Processing Times - December - I - 2013

Corporate News

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Cabinet approves Rs 6,600-cr TVS Capital cheerful interest-free loans for sugar mills about agriculture, food businesses T he Cabinet Committee on Economic Affairs approved Rs 6,600 crore interest free loans to the beleaguered sugar mills to ease their cane payment burden, said Food Minister K.V. Thomas. The CCEA also approved the exports of sugar without any quantitative restrictions, said Information and Broadcasting Minister Manish Tewari. The Government will soon notify the sugar package. Interest free loans were one of the relief measures suggested by the informal group of ministers led by Agriculture Minister Sharad Pawar to help millers clear dues and make timely payment in the current crushing season 2013-14. The Government had asked the panel headed by Pawar to look into the issue following the millers’ reluctance to start crushing for the 2013-14 season starting October. Sugar millers, who are reeling under the impact of high cane costs amidst a bearish trend in sweetener prices, are currently saddled with the payment arrears for last season

estimated at Rs 3,400 crore, while dues for the current season have started building up with the pick up in cane crushing. As part of the relief scheme, bankers were likely to lend equivalent to the excise duty paid by mills in the last three years, while the entire interest of 12 per cent would be borne by the Centre and the Sugar Development Fund. Loan recast The Pawar-led panel had also recommended recasting of loans taken by mills as per the Reserve Bank of India norms, incentivise production of 4 million tonnes of raw sugar and create buffer stocks besides doubling ethanol blending in petrol to 10 per cent. These other measures were likely to be considered by the Cabinet next week. Pawar had told that the relief measures would be announced in stages. “The loans will help the industry reduce around Rs 500 crore annually of interest burden in the next 5 years. The industry eagerly waits for the Government’s help to

reduce some of the surplus sugar stock as well as take immediate steps to rationalise cane pricing policy. Those can further help the sugar sector come out of the current financial crisis,” said Abinash Verma, Director General of the Indian Sugar Mills Association in a statement. Cane crushing has picked up with 426 of the 500-odd mills have started crushing across the country as on December 15. However, the production of the sweetener is down by 50 per cent at 24.24 lakh tonnes as on December 15 over corresponding last year. The industry has started the 201314 season with carry forward stocks of 8.8 million tonnes and the production this year is expected to be 25 million tonnes more than the domestic demand of 23 million tonnes. The CCEA deferred the issue relating to increasing buffer stocks. A panel including Finance Minister, Agriculture Minister and Planning Commission will look at the issue, said Thomas.

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hennai-based growth equity company TVS Capital Funds Limited, which manages Rs 1,200-crore investments, is bullish on agriculture, food with the Food Security Bill in place. Besides, it is also looking to invest in the manufacturing sector. “The country is expected to put more focus on productivity, which translates into more farm equipment, better irrigation, increased seed supply, and opportunities in logistic and supply chain,” said Gopal Srinivasan, chairman and managing director of TVS Capital. TVS Capital essentially invests in domestic consumption sectors including education, healthcare, agriculture and food, and retail. The deal size for it ranges from Rs 50-100 crore. It helps first generation companies increase size and improve cash flows. Srinivasan said the $350-billion Indian agri and food sector

had a great potential and added, currently a $ spent on agriculture provided an added value of another dollar in India. However, in other developing nations like Brazil and Mexico it stood at $4-12. With Hyderabad having worldclass intellectual property such as International Crop Research Institute for Semi-Arid Tropics (Icrisat) and National Institute of Nutrition, TVS Capital expects good entrepreneurial culture and funding ideas here. In manufacturing, with hiring costs on the rise in China, the small and medium enterprises here have an advantage in exports and increased investment opportunities in infrastructure management services, according to him. Apart from these, it is actively considering opportunities in the government-generated services. “The Indian government is the single largest outsourcer in the country,” said Srinivasan.

Odisha govt intensifies efforts for promotion of food ITC Group seeks land processing units in the state in Punjab for food

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overnment intensified efforts for promotion of food processing units in the State. The State Level Empowered Committee ( SLEC) Meeting held under the chairmanship of Chief Secretary Jugal Kishore Mohapatra in secretariat conference hall has decided a number of measures to be followed up in this direction. Secretary MS&ME Sri Panchanan Dash outlined the issues for discussions and put forth new project proposals for considerations the committee. Chief Secretary has also directed to form a state level steering committee on food processing under the chairmanship of Principal Secretary, Agriculture for coordination among different departments and agencies involved in implementation of Food Processing policy of Government of Odisha as well as the National Mission on Food Processing (NMFP). The departments like Horticulture, BMC,OMFED, APICOL , Employment Technical education & Training who are mostly implementing the food processing policies will brought under one umbrella for more focus and facilitation. The committee will look in to the implementation of food processing units, promote more investment in this sector and will suggest measure to be taken both at policy and implementation level for expediting the projects. The meeting mostly discussed about the provisions and guidelines

provided for implementation of the projects under NMFP. Chief Secretary has advised Horticulture departments to take up promotional activities, collection centers, technology upgradation works under the scheme. BMC has been advised to take up modernization of at leat 50 meat shops both from Cuttack and Bhubaneswar under the scheme. It has been decided in the meeting that upgradation of infrastructure in 2 Govt. technical institutions will be taken up under the scheme. The type of projects to be promoted under the scheme includes establishment of modern food processing units, technology upgradation in existing units, schemes for cold chain, value addition, preservation, setting up and modernization of abattoirs, creation of infrastructural facilities for running of degree/diploma courses, entrepreneurship development, food processing centers, schemes for creation primary processing units, collection & aggregation centers, modernization of meat shops and promotional activities like conducting exposure visits, surveys, exhibitions and facilitation workshops. The committee has approved 5 food processing units involving total investment of Rs24.60 cr. proposed to be set up in the districts like Balasore, Dhenkanal, Mayurbhanj and Jajpur. The committee has also considered other 4 projects of agrodiversification, food processing,

and modernization of existing units which envisages a total investment of around Rs.35 Cr. These 4 projects have been put to technical and feasibility scrutiny after which it will come to SLEC for approval. Chief Secretary has directed MS&ME department to expedite the process and clear up the permissible projects quickly. Available data shows a total fund of Rs924 lakhs have been released for promotion of micro medium and small enterprises during 2012-13. This includes the central share of 75% and state share of 25%. Budgetary provision for another Rs712 lakhs has been made for 2013-14. Chief Secretary has directed the concern departments to work out convergence up state subsidy programmes with subsidy provision of NMFP so that the prospective entrepreneurs can be provided with more assistance. Mohapatra has directed to utilize various provisions of food processing of policies and scale of performance in this sector. Economic Adviser to Ministry of Food Processing Sri G. Bhujabal, Secretary Cooperation Sri Bishnupada Sethi, Secretary Employment Technical Education and Training Dr. C.S. Kumar, Director Horticulture Sri Sanjeev Chadha, MD. APICOL Sri Om Kar along with other senior officers from concern departments participated in discussion.

processing unit

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TC Group has sought land from the Punjab government for setting up a food processing unit in the state. “My association with Punjab goes a long way, my maternal and paternal grandparents are from Punjab. We are a food processing company,” Y C Deveshwar Chairman ITC said here at the Progressive Punjab summit. “Give us a piece of land somewhere near Jalandhar or Ludhiana and we will set up a globally competitive food processing industry in the state,” he said. It will not only provide jobs to the region but will help in building the overall economy of the state, Deveshwar said. ITC Ltd or ITC is a conglomerate headquartered in Kolkata, West Bengal. Its diversified business includes five segments --FMCG (Fast Moving Consumer Goods), Hotels, Paperboards, Paper & Packaging and Agri Business. Another corporate Hero MotoCorp also said that the firm would like to set up an education facility in the state. “We are looking at setting up an education facility or a university

in the state and would also like to expand our healthcare business,” Sunil Kant Munjal Joint Managing Director of Hero MotoCorp. Country’s largest two-wheeler maker Hero MotoCorp reported 5.61 per cent rise in total sales at 5,30,530 units for November this year. The summit was attended by various diginatories including corporate honchos like Mukesh Ambani (RIL), Y S Deveshwar (ITC), Sunil Bharti Mittal ( Bharti Enterprises), L N Mitttal (Arcelor Mittal),Kiran Majumdar Shaw (Biocon), GVK Reddy etc. Deputy Chief Minister of Punjab Sukhbir Singh said that the state is a power surplus state now and the government’s thrust on infrastructure will continue. “We are electricity surplus now, we will complete the construction of 4-6 lane highways in the state in the next three years, we have a domestic airport coming up in Bathinda and an international airport in Mohali,” he said. The state government is also working its way forward in job creation in the fields of IT, textiles, health, etc.


Beverages & Food Processing Times - December - I - 2013

Food Processing News

India to retain top rice exporter rank, says CARE Ratings

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ndia is expected to retain its top rank as rice exporter in 2012-13 marketing year on bumper production and strong export demand for Indian rice, both basmati and non basmati. India’s production of rice hit an all-time high in 2011-12 crop year (period from July to June) and crossed the 100 million tonnes level. India has also emerged as the world’s leading exporter of rice in 2011-12 (period from October to September) and is expected to retain its top rank as rice exporter in 2012-13 due to bumper production and strong export demand for Indian rice, both basmati and non basmati, CARE Ratings said in its report. According to the first advance estimates released by the agriculture ministry, India’s kharif rice crop output is expected at 92.32 tonnes during the 2013-14 crop season, which is more or less in line with the kharif rice output of 92.76 tonnes last year. India is expected to retain its top rank as rice exporter in 2012-13 marketing year given the second-highest level of production during the 2012-13 crop year, large public stocks, liberal export policy and weak currency.

Every district to get two Kamdhenu dairies-UP

In Bakery

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he state government has decided to set up two Kamdhenu dairies worth Rs 1.25 crore in the district to enhance milk production by another three lakh litres. It is a part of state animal husbandry’s plan to set up two such units in every district of the state to end shortage of pure milk The district has been facing acute crisis of pure milk. The current milk production is around 70,000 to 80,000 litres which is insufficient for the 35 lakh population of the district. The Kamdhenu dairies is likely to bring about a positive change in the situation. Principal secretary of Animal Husbandry department Yogesh Kumar has cleared the plan of setting up two Kamdhenu dairies in every district of the state to encourage dairy industry. A letter has already been issued in this regard to all chief development officers (CDOs) of the state. Every dairy would entail a cost of Rs 1.04 crore and would have 40 milch animals. The government has also decided to allow people involved in the project to keep their cows and buffalos in the dairy. However, the species of the cows or buffalos should be the same as that in the dairy. The production of about three lakh litres of milk is being expected with the establishment of two dairies in the district. Chief development officer (CDO) Sukhlal Bharti told that the efforts were underway to start the Kamdhenu dairies in Bahraich district at the earliest. Milk producers of the district were being identified so that financial assistance could be provided to them to purchase cows.

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Beverages & Food Processing Times - December - I - 2013 India’s Ist Fortnightly Newspaper For Beverages, Food & Allied Industries

www.timesinfomedia.com

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Food Safety

Vol. 6, Issue 7, December (I) 2013, Rs. 20/-

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he Agriculture and Food Processing Industries Minister, Mr. Sharad Pawar is advocating for state level reforms and linkages between agricultural production and the requirement of food processing industries. He has called for state level reforms and linkages between agricultural production and the requirement of food processing industries, for fast growth of the sector.

FSMS Plan

A Mandatory Requirement .…!!!!

The ongoing projects in the food processing industries sector that have been assisted by the Government will create an additional capacity of 1.7 lakh tonnes of cold storage, 1.37 lakh tonnes CA (controlled atmosphere) storage, deep freezers worth 57,000 tonne capacity, 591 reefer carriers and 103 lakh liter per day milk storage in the country. Shri Pawar also expressed the hope that investors will make use of various incentives offered by the Government to them. MOFPI has now invited offers for setting up of 15 cold chain projects under the Scheme for Cold Chain, Value Addition & Preservation Infrastructure, with the scheme grant up to Rs.10 crore for setting up a cold chain project. This will facilitate investment in food processing sector by improving availability and quality of horticultural products round the year. In the recent years, the food processing sector has been growing at a pace much faster than agriculture and the manufacturing sector. There is a need to accelerate this pace by disseminating the benefits extended by the government among the investors so that they are able to appreciate the attractiveness of this sector and make informed decisions on investment. Thus the Ministry of Food Processing Industries and ‘Invest India’ have entered into an agreement for the setting up of an Investors’ “Help Desk” for offering online support to investors, both domestic and foreign, with regard to their queries, guide them and provide hand holding services particularly at the initial stage of setting up their units. Foreign investors need something more than mere dissemination of information. The Government has permitted foreign direct investment up to 100 per cent in the food processing sector through automatic route. There is a need to proactively market India as an attractive destination. In terms of market size, India has a domestic market of over a billion population, with 300 million strong middle class consumers. India’s domestic food market is estimated to reach US $ 258 billion by 2015. India is a richly endowed agricultural nation and is favorably positioned in terms of closeness to markets in the Middle East, Africa and South East Asia. Of late, this sector has been attracting a lot of attention from foreign investors. These investors need some hand holding services in the initial stages so that they can easily tackle the requirements of different procedural formalities for setting up their manufacturing activities. Ministry of Food Processing Industries has also urged the industry to collaborate with Universities, and institutions to promote skill development of professionals in the food processing sector to equip the sector adequately to deliver the huge task of understanding and implementing food safety regulations. There is an urgent the need for creating awareness about the evolution of food safety standards and regulations among people and professionals. Right now, the organized private sector is most articulate about the implications of new regulations on business development that are being brought about by FSSAI. While agricultural and food sectors have come a long way in expanding production, value added products, and exports, there is a long way to go. The efforts to harmonize Indian food safety standards with Codex (global standards) will provide the much needed fillip to food processing industry. Going forward, setting up of horizontal standards will ease out product approval process. There is need to disseminate good practices across the value chain (related to procurement, storage, distribution, farm management, etc). Currently gap analysis of 72 public laboratories is underway. With a corpus of Rs 800 crore (which is about 75% of the cost of upgradation of laboratories), existing laboratories are being upgraded and 33 new facilities are being put in place taking the number of modern laboratories to 105 in the country. I think a multi-stakeholder collaboration will be important to bring about a better and effective food safety standards and regulation environment in the country. Ministry of Food Processing Industries has also entered into agreements with some developed countries viz. Germany and France for bilateral co-operation in the field of Food Processing, which generally include processed food segments including fruits & vegetables. Besides, the Department of Agriculture & Cooperation has entered into number of umbrella agreements with some developed countries like USA, France, Canada, The Netherlands, Argentina, Austria, Brazil for bilateral cooperation in the areas of agriculture and allied sectors which generally include agro and food processing, cold chain etc.

Sanjay Indani Introduction of FSMS: A Food Safety Management System (FSMS) is a network of interrelated elements that combine to ensure that food does not cause adverse human health effects. These elements include programs, plans, policies, procedures, practices, processes, goals, objectives, methods, controls, roles, responsibilities, relationships, documents, records, and resources. The purpose of FSMS is to ensure the manufacture, storage, distribution and sale of safe food There are five basic key elements of Food Safety Management System which are as follows: • Good Practices/ PRPs • Hazard Analysis /HACCP • Management Element / System • Statutory and regulatory requirements • Communication Objective of Food Safety: Objective of Food Safety Management is to ensure availability of safe food across the country. In a big country like India, where food habits are different in different zones in the country, it is an uphill task to implement uniform policy across the country. Economic status of the people divided the population into several groups and concept of safe food is not the same among these groups. Poor literacy rate also contribute to this. As per WHO report, it has been estimated that 70% population in India suffers from various diseases caused due to consumption of unsafe food. These food borne diseases can be controlled by stopping consumption of unsafe food. Current Scenario: The real challenge in front of the Food Safety and Standards Authority of India is to implement the Food Safety and Standards Act, 2006 in a stringent way to ensure availability of safe food in the market. India has various food products in each state and food innovation is taking place at a high rate. The consumer safety is of paramount importance and main objective of FSSAI is to ensure that all products which are placed

in the market are having appropriate safety. This is achievable only if the Food Business Operators (FBO’s) take preventive measures in respect of hygiene, sanitation and stringent quality control of food products in every stage starting from collection of raw materials to the platter in the dining table. Any weakness in this chain will make the product unsafe. Internationally and even in India, there are many Food Safety Certifications which meets these requirements. These are HACCP, ISO 22000, FSSC 22000 and many more. These are voluntary certifications to strengthen the food safety system. However, under current Indian regulation defined by the FSS Act 2006, Food Safety Management System (FSMS) means the adoption of Good Manufacturing Practices, Good Hygienic Practices, Hazard Analysis and Critical Control Point and such other practices as may be specified by regulation, for the food business. It is a legal requirement for FBO’s to have a Food Safety Management System (FSMS) How to write your FSMS: • Decide how you meet the prerequisites • Draw a flow chart • Write a food safety plan • Keep daily records • Review your FSMS regularly. This should be done every year or whenever something in the business changes. Structure of the FSMS Program: Pre-requisites

Record Forms

FSMS Program

Flow Chart

Food Safety Plan

Prerequisites: Prerequisites are the “building blocks” of good hygiene that each FBO must have in place before writing the FSMS. The prerequisites are: • Training • Personal hygiene • Construction, design and maintenance • Cleaning • Waste disposal • Pest control Writing down how you satisfy each of these prerequisites is the first part of your FSMS. We, QSafe Consultants (India) can help you by doing Gap Assessment of your facility to check whether the PRPs you have implemented in your industry are appropriate and suggest you any modifications to be done, if required. Flow Chart: • A flow chart is a list of the different steps involved in preparing food • The flow chart will follow every step in the process right from receipt of


Beverages & Food Processing Times - December - I - 2013 • •

food to serving the customer Writing a flow chart is the second part of your FSMS This is an example of a simple flow chart:

Purchase / Receipt

Dispatch

Storage

Preparation / Cooking

Packing & Storage

FSMS Plan: Every manufacturing unit should submit a Food Safety Management System Plan. It has to be developed based on Schedule – 4 of Food Safety and Standards Regulation, 2011 in which general hygienic and sanitary practices to be followed by food business operators have been elaborated. Hygiene and Sanitation are the basic compulsory requirements for ensuing safety of the food manufactured in any premises. FBO’s shall continuously try to improve the sanitary and hygienic conditions at their premises. Along with sanitation and maintenance of establishment premises, personal hygiene of workers as well as personal cleanliness is also to be ensured by the FBO’s. Persons working directly with and handling raw materials or dairy products shall maintain the highest standards of personal cleanliness at all times.

In particular they shall Wear suitable, clean working clothes and headgear which completely encloses their hair Wash their hands at least each time work is resumed and whenever contamination of their hands has occurred Cover wounds to the skin with a suitable waterproof dressing. (No person with injury on hand, even with dressing, shall be placed in any product making/handling section) Avoid certain hand habits - e.g. scratching nose, running hand through hair etc. that are potentially hazardous when associated with handling dairy products and might lead to food contamination through the transfer of bacteria from the employee to the product during its preparation.

When unavoidable, hands should be washed before resuming work after such actions. The food safety plan shows: • Hazard - What problems could happen • Control measures - What you do to stop problems • Critical Limits - What are the critical limits set for each control measure • Monitoring method - How do you make sure that what you are doing stops the problem

Food Safety • •

Corrective Action - What you do if something goes wrong Records - What records you keep

This is done for every step identified in your flowchart You will need to complete a food safety plan as the third part of your FSMS There may be more than one problem at any one step. You need to think about how to deal with all the problems. Problems can be caused by: • Bacteria, viruses and moulds (Bacterial contamination). Bacteria can get onto food, spread from place to place because of poor hygiene practices and grow under the right conditions. Bacteria can also survive the actions taken to kill them if those actions are not carried out properly. • Glass, metal objects, stones and insects (Physical contamination) getting into food. • Insecticides and cleaning chemicals (Chemical contamination) getting into food. • Foods that can cause allergies like peanuts and sesame seeds (Allergies). There may be more than one way of controlling a problem. For example, FBO can stop cross contamination by separating raw and cooked foods and by using separate equipments.

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Example of a Food Safety Plan: Operational Step

What problems could happen (Hazard)

What we do to stop the problem (Control measure)

What records we keep

Storage

Growth of bacteria

Store food in refrigerator below 8°C

Cross Contamination

Store raw food below cooked food

Daily temperature monitoring record Staff training record

Preparation /

Cross Contamination

Cooking

Survival of bacteria

• Clean & disinfect surfaces • Separate equipment for handling raw and cooked food Thorough cooking to a core temperature of 75°C held for 30 seconds

Cleaning Schedule Staff training record Daily cooking temperature monitoring record

NOTE: The above given example of FSMS Plan does not cover all the steps. It needs to be prepared / customized on the basis of process criticality and product characteristics. FSMS Plan will be different for each process and industry for which guidance of a Food Safety Expert is essential. We, QSafe Consultants (India) can help you in reviewing your PRPs, preparing flow chart, considering the probable hazards occurring at each step and preparing the FSMS Plan for your industry. Author is Head-Food Safety at Qsafe Consultants (India). He is lead auditor & trainer in food safety. He is empanelled with FSSAI & State FDAs as a trainer & conducted more than 500 training sessions across India. For any query related to food safety or FSSR, he can be contacted on 07666578715 or sbi@qsafeindia.com

We have a strong base of knowledge and trained teams

Jyoti Bhasin Jyoti Bhasin, Country Head of NSF in India is the one who is always on the wheels, ready for her clients to solve any issue related to food safety in their companies. Having a great team to support Jyoti has become a well known name in branded food companies for food safety solutions. She is discussing with current issues of the industry with our Editorial Team, below. What are the major food safety issues you see with the Indian Snacks & Namkeen segment? The risks in the segment are similar to what we see in other industries, since the products are ambient (room temperature storage) and have high shelf life ones –it helps in the best consumer interest though.

NSF International, the public health and Safety Company, is committed to protecting and improving human health around the globe through the provision of assurance and certification services, training, testing and consulting to the water and food industries. NSF services provide consumers with the confidence that what they eat and drink meets or exceeds globally accepted standards of health, safety and provenance. NSF is the leading international supplier of food assurance and certification services to businesses in the global food supply chain.

If we focus on two areas of improvement with respect to food safety for the industry we could address a large part of the problem and it will help drive development of systems , there is a general need on all aspects of the food safety management systems to be addressed and the spectrum on businesses are huge- you have at the top end manufacturers with the state of the art facilities and certified food safety systems and on the other end there is the small operator with no set processes and systems at all. A focus on three aspects should help address many a concerns • Manpower education and training • Facility - hygiene and sanitation

Traceability and recall of ingredients and products

and then a third party validation of those systems and procedures.

We have both modern and traditional styles of snacks being sold in the open market, branded and non-branded too. As a food safety expert what are your observations and suggestions to the processors? The basic food safety system is the same across spectrum of these products, they all need to educate their teams, Maintain plant hygiene and know their suppliers and buyers( trace ingredients and recall product capacity). Anyone can do food safety and develop systems, it is good to have an expert but the processors know their product best. I would urge them to invest time to review their current systems and facilities and challenge set practices if required. Processors should review where they are and set a bench mark for improvement for them. Change will not happen in a day but each one of us can set for ourselves targets for improvement and milestones. At the lowest level businesses could target education of food handlers on basic GMP and GHP and facilities hygienic conditions, the more sophisticated ones need to look at systems and procedures

FSSA has been implemented for snacks and namkeem segment as well, do you see some movement interms of awareness and compliance of the rules among processors presently? FSSA is now becoming more and more known to market and gradually more FBO’s are getting aware of their responsibilities. India is a huge country and also has a state and central structures, with the structures and size of the country the awareness is moving forward at a reasonable pace. Indian snacks including potato based and traditional nameeks have a great demand in the global market where the quality standards are set from years, do you see that processors are able to meet the required standards before the exports or they face issues related to food safety? We need to meet the standards of the importing country to export our products to their destinations, they will have specific standards and labeling requirements starting from production of raw material to transportation of the finished product to the final destination.

Many a time’s Indian producers do not meet the required in country standards of these importers at one or more level. There is a need for Export oriented manufacturers to have robust food safety management system which demonstrate good food safety knowledge, functional food safety system, control of their suppliers etc. To maintain a global standard company what needs to be done in a snack food factory on food safety front, can you elaborate stepwise and how helpful will be your company for this segment? We have a strong base of knowledge and trained teams who understand Global markets and business requirements. India needs a road map approach which we have capability to support. Under the road map we need to clearly spell out where we are and where we would like to be and also define time bound milestones on this food safety journey. Our sector specific knowledge coupled with Food safety domain expertise allows us to work with the industry and help them build capacities and increase their market scope.


Beverages & Food Processing Times - December - I - 2013

Beverages News

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Home-grown Beverage companies forging global partnerships

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NSF INTERNATIONAL ThE MOST TRuSTEd NAME IN FOOd SAFETy™ Food Equipment Commercial foodservice equipment with the NSF certification receive guaranteed regulatory acceptance in North America and improved acceptance worldwide. The NSF mark is specified by health departments, restaurant buyers and specifiers. Our services include: Physical Evaluation • Material Review • Performance Testing • Compliance Audits • Certification Global Food Safety Initiative (GFSI) Many of the world’s largest food retailers are mandating supplier certification to GFSI schemes, which include SQF, BRC, IFS, FSSC, GLOBALG.A.P., and BAP. NSF is the leading global certifier to GFSI benchmarked standards. Our services include: Auditing • Testing • Certification • Training & Education Beverage Quality NSF offers integrated safety and quality assurance services for bottlers, retailers, distributors and suppliers of beverages and packaged ice. Our services include: Analysis • Testing • Auditing • Certifications Nonfood Compounds NSF is the only independent, third-party organization that offers product registration for nonfood compounds such H1 lubricants, cleaners and water treatment chemicals used in food and beverage processing. Our services include: ISO 21469 Certification • Product Registration • Toxicology Assessment • Risk Assessment

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o fight multinational competition in the R30,000-crore Indian beverages market, home-grown companies like Kishore Biyanipromoted Future Group and Rasna Beverages, part of Rasna Group, are tying up with international beverage majors for branding and licensing agreements. To start with, retail major Future Group is getting ready to sign a deal with a Californiabased beverages company next week for its foray into the aerated drinks sector in India through the brand licensing route. According to industry sources, the company is in advanced talks with two global beverages companies, namely Shasta Beverages and California Soda Company, both based in California. With this Biyani’s company hopes to compete with Coca-Cola India and PepsiCo India in the Rs 15,000-crore carbonated soft drinks sector in India. Meanwhile, Rasna Beverages is in the process of finalising a deal with an European company to launch its beverages brands in India.

Yet another FMCG company Parle Agro, which re-entered the carbonated soft drinks sector in India with the launch of ‘Cafe Cuba’ is beefing up its product portfolio to take on its multinational rivals. On the group’s plans, Future Group chairman Kishore Biyani said, “It’s a brand licensing arrangement that will mark our entry into the FMCG space in India. We would like to get into the league of the big aerated companies of the world.” Biyani is increasingly focusing on the group’s FMCG business which was demerged into Future Consumer Enterprises, formerly known as Future Ventures. Biyani expects it to be a R1,000crore company by this fiscal. Cashing in on his mass appeal, Biyani is expected to opt for mass market strategy to promote the group’s aerated drinks business in competitive markets. “Biyani will surely introduce his fizzy drinks at affordable price points to reach out to a wider target audience. With his brand promotion strategy, Biyani will try to drive volumes in this sector,” an industry analyst with a domestic brokerage firm said. Like Biyani, Rasna chairman Piruz Khambatta is betting big on mass market strategy to drive volumes in domestic markets. ‘’We are currently negotiating the modality of our arrangement with an European company. We are still in the process of it,” said Khambatta. According to Khambatta, Rasna’s new product will be launched entirely in the foreign partner’s name as it has more premium brand recall in one or two categories. ‘’In other categories, we will have the branding of Rasna on some products,” he added. Meanwhile, Parle Agro is putting in place the distribution and infrastructure plans to launch carbonated drink Cafe Cuba in 2014. “In the Indian carbonated soft drinks sector, we are targeting a 7% market share within a year,” Parle Agro chairman Prakash Chauhan said.


Beverages & Food Processing Times - December - I - 2013

Beverages News

‘Non-alcoholic beverages need policy push’

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ationalisation of taxes coupled with focussed support from Government to promote modernisation will give a fillip to the non-alcoholic beverages sector in the country, a report said. The report ‘Food Processing Industry in India – Unleashing the Potential of Non-Alcoholic Beverage Sector’ brought out by the Indian Council for Research on International Economic Relations (ICRIER) has suggested that policies have to be interlinked and prioritised to streamline the entire supply chain, help attract investment and develop manufacturing. The non-alcoholic beverages sector, part of the food processing industry, consists of segments such as bottled water, carbonated soft drinks, fruit and vegetable juices and concentrate, ready-to-drink tea and coffee, milk-based beverages and energy and sports drinks. Stressing on the need for streamlining the clearance process for setting up manufacturing facilities, the report said there was an urgent need for uniform classification of non-alcoholic beverages by state pollution control boards. It recommended uniform low taxes for all non-alcoholic beverages across states and classification of the sector in the ‘orange’ or moderately polluting industry category to expedite clearance for manufacturing facilities. Releasing the report, Union Agriculture Minister Sharad Pawar called for state-level

Tata Group Leveraging Copper, Zinc in Vitamin-Water

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reforms and linkages between agricultural production and the requirement of food processing industries to accelerate growth. “There is a need for economies of scale to make our non-alcoholic beverage sector globally competitive and to improve productivity, enhance investment and employment,” Pawar said, adding that major players were planning incremental investments to an extent of over $10 billion by 2020. The ICRIER report added that investment in the sector would automatically flow if the Government, instead of giving subsidies, streamlined taxes, enhanced transparency and provided the necessary infrastructure. The non-alcoholic beverages sector currently accounts for over one per cent of the country’s GDP.

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ome time ago, PepsiCo and Tata Global Beverages floated a joint venture called NourishCo Beverages. The JV soon launched a line of nutrient-heavy drinking water called Tata Water Plus and Tata Gluco Plus. Available in just two states of India so far, the plan now is to make these water brands available in Tier 2 and Tier 3 cities of the country soon. Tata Water Plus, the joint venture’s debut product, claims to be India’s first nutrient water and is priced at about 25 cents (Rs 16) for a 750 ml bottle. Tata Gluco Plus was developed by PepsiCo. It is priced at about 9 cents (Rs 6) for a 200 ml cup. And, here’s the missing link to those crucial minerals, copper and zinc. The company has claimed that the nutrient-enriched water shall contain copper and zinc, two metals that are known to strengthen the human immune system. A report quoting Sushant Dash, global brand director of Tata Global Beverages, said many Indians were nutritiondeficient in a lot of aspects, and therefore his company had decided to launch the bottled water all over India to build more awareness. Ah, the penny drops. Without turning this report into a health

bulletin very quickly (too late?), zinc is thought by many nutritionists to be the most important mineral supplement because of its near-absence in our daily diets. Zinc is the nutrient that aids the immune system. Copper, too, plays an important role in propping up our immune systems and even a slight deficiency could prove to sometimes have disastrous results. With a major percentage of the Indian population suffering from a deficiency in one or both of these crucial immune system boosters, and a major part of the country suffering from water shortages, Tata and Pepsico seem to have hit upon the right formula. The two water brands under the Nourish Co brand are part of PepsiCo’s overall plans to invest about US $5.5 billion in India by 2020. India’s first nutrient water, by the way, has been developed in collaboration with scientists and Indian nutrition experts. Although Tata Global Beverages is still way below the food chain vis-à-vis bottled water, Parle Bisleri being numero uno, it plans to scale up its presence in the packaged water segment, both at the upper and lower ends of the market.

Beverage industry to Future Consumer Enterprise to launch Sunkist Brand in India grow at 16.5-19%: report

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uture Consumer Enterprise Limited (FCEL) will be launching one of the world’s leading food and beverage brands, Sunkist®, in India. FCEL has entered into a long term agreement with California-based Sunkist Growers, Inc., a leading international licensor and the most widely recognized name in the citrus category, to manufacture, market and sell fruit juice, fruit juice drinks, sparkling beverages and a range of other food products under the world-famous Sunkist brand in India. Sunkist is a brand that consumers trust to deliver consistently delicious, premium quality, fresh citrus products and FCEL will bring the same commitment to quality to India with these product offerings.

The agreement is part of Sunkist’s Licensed Products Program, which ensures that products are made in accordance with Sunkist’s high-quality standards. FCEL’s India Food Park in Tumkur, Karnatka will play a critical role in this partnership, managing the sourcing, manufacturing, packaging and distribution of the food and beverage products. The Sunkist line of products will be launched in all Big Bazaar, Food Bazaar, Foodhall, KB’s Fairprice, Aadhaar Wholesale, Big Bazaar Direct stores and will also be sold through all modern and general trade stores across India. “Sunkist, one of the most recognized and respected fruit brands, is an addition to the list of winning FMCG products in

our portfolio. The introduction of Sunkist products in India will also mark the company’s entry into the general trade, making FCEL one of the fastest growing Indian consumer goods company.” said Mr. Kishore Biyani, Group CEO, Future Group. Sunkist is a leading food and beverage licensor, licensing the Sunkist trademark to more than 60 food and beverage companies worldwide. The Sunkist brand is present on more than 800 products in 86 countries around the globe. With this agreement, FCEL has joined the league of other major FMCG companies like General Mills Inc., Titan Foods, Inc., Maverick Brands, Nestle Professional Beverages and Schweppes Australia Pty Ltd. that have been manufacturing and marketing Sunkist products across the world. “We at Sunkist are very pleased to enter this agreement with the Future Group, as it will increase our distribution and recognition in India, a very important region in the global marketplace. With its vast retail presence in India, FCEL brings a deep understanding of Indian consumers to this partnership that believe will help Sunkist secure a place among the top FMCG brands in India.” said Mark Madden, VP Licensing, Sunkist Growers, LLC.

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onsumption of nonalcoholic beverages is expected to increase by 16.5-19% over the next three years as more people are trading up to packaged drinks, according to a report by the Indian Council for Research on International Economic Relations (ICRIER) and the Indian Beverage Association (IBA) released. Corporate manufacturers of non-alcoholic beverages are expected to grow at an annual rate of 16.5% and noncorporate manufacturers at 19%, according to the report titled Unleashing the Potential of the Non-alcoholic Beverage Sector. The estimates are based on an assumed gross domestic product growth of 7%, which is much higher than the 5% growth several economists are forecasting. India’s beverage market is largely unorganized, with nearly 75% of the demand serviced by companies in the unorganized sector. But in the past 18 months, the world’s largest beverage makers Coca-Cola Co. andPepsiCo Inc. invested heavily towards building capacity and developing bottling infrastructure in the country over the next 7-8 years, to

meet the growing demand for packaged beverages. The ICRIER-IBA report said that with the rise in incomes India’s non-alcoholic beverage sector has evolved both in terms of product variety and the number of companies in the market. According to another report by researcher Business Monitor International, the Indian market of non-alcoholic beverage market comprising carbonated drinks, juices, bottled water, ready-to-drink tea and coffee, and sports drinks is expected to touch $5.18 billion by 2015. S.R. Goenka, president, IBA, said India’s non-alcoholic beverage sector holds several advantages in terms of its large consumer base, abundant supply of raw material and a pool of low-cost, skilled labour. “The sector has seen double digit growth postliberalisation, and is currently contributing over 1% to India’s GDP. With industry leaders such as Coca-Cola and PepsiCo announcing significant investment plans for India, there is a clear indication that the sector offers significant potential for growth in the coming years,” he said in a press release.


Beverages & Food Processing Times - December - I - 2013

Bakery & Confectionery News

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ITC’s Sunfeast creams beats all

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he slugfest for the numero uno position in the Rs 4,600-crore cream biscuit market has been on for a while now ever since new entrants like ITC and Cadbury joined the fray. Even as the skirmish continues unabated, with each of the brands baking fresh strategies, ITC’s Sunfeast, for now, has emerged a clear leader in the segment. For the year ended October 31, 2013, ITC’s cream biscuit market share stands at around 25% in value, according to industry sources who quoted allIndia Nielsen numbers. The market share numbers for Parle Products and Britannia for the same period were under 20%. Exactly a year ago, the three rivals were running a close race with their respective market shares at about 23%. However, there was no clear leader in sight then. Sunfeast, it appears, has inched up by capturing market share from both Britannia and Parle in cream biscuits. Cadbury’s Oreo, on the other hand, has maintained its share of 5-6%.

Chitranjan Dar, divisional chief executive, foods division, ITC, attributed the company’s gains in cream biscuits to its relentless focus on portfolio enrichment through innovations like SunfeastDark Fantasy Choco Fills and Choco Meltz and Sunfeast Dream Cream range. “These flavours have created excitement among consumers and significantly enhanced the consumer franchise of the ‘Sunfeast’ brand,” said Dar. What’s helped in the process is ITC Hotels’s marketing and distribution infrastructure, which Sunfeast has leveraged to stay ahead of the curve. Britannia Industries, which restaged its cream biscuit brands Bourbon and Jim Jam along with additional flavours, believes it is seeing significant positive shifts in the premium cream segment. “In an intensely competitive segment with high levels of investment, our focused approach is paying dividends,” a Britannia spokesperson said. Britannia believes the “indulgence category” is key to its portfolio of both cookies and creams, which addresses differential consumer preferences. Although a mail sent to Parle Products did not elicit a response till the time of going into print, the company has collaborated with Warner Bros to introduce a biscuit range embedded with Tom and Jerry faces. Parle Products believes the move will strengthen its dominant position in the overall Rs 21,000-crore odd biscuit market. Industry analysts said the biscuit market has undergone a drastic change in the last decade. For one, the share of the organized market, which at one point used to be just about 10%, has gone up significantly to become more than half of the total size. “The high-end cream biscuit market is even more organized. Sunfeast was launched at the right time when the organized market was expanding. This helped the brand to expand rapidly in a market, which was for years dominated by Britannia and Parle,” said Paras Bothra, VP, equity research, Ashika Stock Broking.


Beverages & Food Processing Times - December - I - 2013

Hershey’s Jolly Rancher Lollipops now available in India

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ver since it arrived in India and partnered with Godrej in 2007, Hershey has not had an easy time, but now things are changing for the better. The North American confectionery company took over its Indian venture completely in September 2012, changed its name from Godrej Hershey to Hershey India, and finally launched its Jolly Rancher Lollipops in three flavors for the first time in India in December 2013. According to the company’s press release, India is the first country outside North America where the Jolly Rancher lollipops are available. The brand is widely acclaimed for its tart and sweet fruity flavors, and Indians with a sweet tooth can now purchase three distinct flavors of Jolly Rancher Lollipops—Watermelon, Green Apple, and Mango for INR5 each. The company says that it has developed the mango flavor especially for Indian consumers. The company has also tested each of these flavors with local consumers, who were delighted with the new sweets. Atul Razdan, the general manager of sweets and refreshments marketing for Hershey India, said: “The Jolly Rancher brand is a perfect line of products for sweets-loving consumers in India.” Unfortunately, Jolly Rancher lollipops will not be

available all over the country, but only at a few selected outlets in major Indian cities. Anil Talreja, a partner of the Mumbai-based Deloitte Haskins and Sells, gives great importance to packaging and pricing. He said: “What is extremely important is pricing. People in India are very driven by price.” Since sugar confectionery is relatively cheaper when compared to snack bars and ice creams, the confectionary sector has grown rapidly in the country. Talreja also suggests that Hershey must market its product well as Indians could take it for granted that an international brand will be costlier than local products. Before Hershey took complete control of its Indian venture, it had focused on its Indian brands Maha Lacto and Nutrine. In future, the company plans to introduce five products outside the US market, and Jolly Rancher Lollipops happen to be one of them. Hershey’s local Indian brands had not been performing well in the market. While the sales of Maha Lacto toffees had plummeted to 0.9 percent of the total confectionery sold in the country in the year 2012, the sale of Nutrine had fallen to 0.7 percent. Hershey wants to expand into India and other parts of the world so that it can achieve its target of $10 billion annual revenue by 2017.

Stung by popular protest, Britannia cuts cake prices

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aced with a mounting opposition from consumers to frequent hikes in prices in the FMCG sector, Britannia has been forced to step back and stick to its original price point of Rs 10 for its popular range of cakes in select markets. The price hike from Rs 10 to Rs 12 had become a big turn-off as earlier pricing was convenient, several retailers in Kolkata told. “People were picking up the packs and then putting them back after realising that they have to shell out an additional 2 rupee coin,” a retailer said. Britannia has been selling its bar cakes that come in flavours

like orange, butter sponge, pineapple and chocolate at Rs 12 for a 60 gram pack -- the most popular size -- and also at Rs 25 for a 130 gram pack. The prices of the smaller pack have now been brought down to Rs 10, considered an attractive price point. But this isn’t exactly a price cut as the grammage for Rs 10pack has been cut down from 60 grams to 50 grams. Despite softening of prices of some of its inputs, Britannia has been continuously raising prices, which helped it post a standalone topline growth of close to 14% on year at Rs 1,594 crore during the second quarter, driven to some extent by a superior product mix. Gross margin rose a steep 390 basis points helped by all these factors. The cut in the price point of the cakes is only to address consumer resistance as retailers pointed out that Britannia is even going to raise prices of its Cream Cracker brand for some packs by around 14%, traders said.

Bakery & Confectionery News

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Parle Products joined hands with Warner Bros, Tom and Jerry

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ndian biscuit industry is set to witness a new innovation as two of the world’s most iconic brands come together to offer a product never seen before in the market. Parle Products, India’s largest biscuit manufacturer, has joined hands with Warner Bros. Consumer Products to introduce a biscuit range with Warner Bros.’ beloved animated characters Tom and Jerry, that have entertained many generations. For Mumbai-based licensing enterprise, Dream Theatre Pvt. Ltd, this ranks among its top merchandising quests. The initiative will see Parle Products introduce a new range of its popular Milk Shakti Milky Sandwich biscuits embedded with Tom and Jerry’s faces.

Carrying all-new packaging, these biscuit packs will be available in the market in two sizes – 60 grams and 120 grams, costing Rs 10 and 20 respectively. The launch of these exciting biscuits will be followed by a postlaunch television commercial. With Parle on board, the product is poised for longevity in the biscuit segment. The move assumes much significance for being the first of its kind in the market, and with the INR 21,213 crore biscuit industry watching, Parle’s dominant position will earn an extra ring of innovation. Sharing his views on the announcement, Mr. Jiggy George, Founder and CEO of Dream Theatre Pvt. Ltd. offered, “This deal spells good news for the licensing industry. Tom and Jerry aren’t just

animated characters – they have an instant ‘happiness appeal.’ We are very excited about the Parle Milk Shakti Milky Sandwich - Tom and Jerry association, a unique tie-up that brings together the strengths and acumen of Parle Products, the largest biscuit player in India, and the immense popularity of Tom and Jerry, among young and old alike!” Mr. Pravin Kulkarni, General Manager, Marketing, Parle Products adds, “Tom and Jerry, with a classic legacy, have a lot of fans amongst both kids and adults in India. To get Warner Bros.’ Tom and Jerry on board is definitely a landmark for Parle. We have associated with Warner Bros. Consumer Products to bring Parle Milk Shakti Milky Sandwich - Tom and Jerry biscuits to consumers everywhere and delight them!” “We’re pleased to mark WBCP’s entry into India’s food and beverage market by partnering with Parle Products for Parle Milk Shakti Milky Sandwich - Tom and Jerry biscuits,” said Preston Kevin Lewis, Managing Director – Australia, New Zealand & India for Warner Bros. Consumer Products. “This new partnership allows us to bring the most popular animated brand in India to consumers in a fun new way.”

Britannia sets up first bakery unit in Gujarat

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ood products major Britannia Industries has set up its first bakery products unit in Gujarat at Jhagadia Industrial Estate in Bharuch district to cater to markets in Gujarat, Madhya Pradesh, Maharashtra and Rajasthan. The Jhagadia plant, spread on over 26 acres with the investment of Rs 100 crore, has the annual capacity of 45,000 tonne, and has already gone on steam.

Reuters “Setting up of the green field plant will help the company increase presence in Western markets and decentralise distribution activities for Western India,” Varun Berry, Chief Operating Officer (COO), Britannia Industries, told reporters. “Decentralisation of manufacturing facilities will help consolidate regional distribution costs and hence control overall logistics cost,” he said.

Berry said the market for biscuits is huge in India but its per capita consumption remains subdued in Gujarat and other states in the Western region. Britannia products are available across the country in over 35 lakh retail outlets. Berry informed that the company has requested governments of Gujarat, Tamil Nadu, Andhra Pradesh, Kerala to add biscuits to the menu of midday meal. Berry also informed that Britannia plans to set up its manufacturing units in Erode and Perumudaria in Tamil Nadu owing to the highest per capita consumption of biscuits in the southern state. The company recently invested in Odisha and Bihar to strengthen its position in the Eastern India. Britannia’s biscuit brands include Tiger, Marie Gold, Good Day, 50:50, Nutrichoice and Treat. “We expect this new initiative to start yielding results from FY’14. Company’s product categories are growing at 15 per cent while overall industry is growing at 10 per cent,” Berry said. The company’s current market share is 40 per cent in the biscuit segment, he added.


Beverages & Food Processing Times - December - I - 2013

Dairy News

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High-tech Dairy farm to India’s per capita milk come up at Koothali availability above world average

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he district panchayat is all set to boost dairy farming in the district by setting up a high-tech farm at Koothali. The move is to utilize the biofertilizer produced from the cattle farm to produce organic vegetables, banana and other crops at the district agriculture farm in Koothali. The high-tech dairy farm has been planned to be set up at Koothali following the model of the Sugarcane Seed farm at Pandalam, said T K Thankamani, chairperson of the standing committee on development of the district panchayat. The district panchayat has earmarked Rs 29 lakh to build infrastructure facilities for starting the dairy farm, she added. The District Agricultural Farm in Koothali was started in 1963 across 40.09 hectares. The farm is presently known for its banana cultivation and for the production of intercrops including ginger, turmeric, cowpea and vegetables. The dairy farm is expected to serve the diverse needs at the farm, said T K Thankamani. Presently, we spend huge sums for purchasing organic

manure for vegetable and banana cultivation and such unnecessary expenditure can be avoided if we start our own dairy farm, she added. Besides, the dairy farm is expected to give a financial boost to farming in Koothali, by generating revenue from the sale of milk and slurry produced at the biogas plant. It is also expected to serve the energy needs of the farm. The district panchayat will seek the assistance and technical support of scientists from Pookode Veterinary University for setting up the hi-tech farm. As the farm is spread across an area of nearly100-acres, grass and fodder for the cattle can also be obtained from the farm, said the standing committee chairperson. Minister for agriculture K P Mohanan will lay the foundation stone for the high-tech dairy farm. District panchayat president K Jameela will preside over the function. Perambra MLA K Kunhammad will also be present on the occasion. The farm will be modelled along the lines of the model Sugarcane Seed farm at Pandalam.

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er capita availability of milk in India, world’s largest milk producer, is slightly more than the world average. This is what chairperson of the National Dairy Development Board (NDDB) Amrita Patel said at the 42nd Dairy Industry Conference held with the theme ‘Indian Dairy Industry: Growth & Trade Issues’. While delivering the keynote address at the conference organized by the Indian Dairy Association (IDA) at Chennai, Patel said the per capita availability of milk in India is 290 grams per day, which is slightly more than the world average which is around 285 grams per day. “Growth in milk production in our country, as reflected in the rate of inflation, appears to be satisfactory when compared to other protein foods like eggs, meat and fish,” she said. Over the last five years, India’s milk production has increased by about 25 million tonnes compared to an increase of about 6.6 million tonnes in the United States, 5.4 million tonnes in China, 2.7 million tonnes in New Zealand and 1.6 million tonnes in the European Union.

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Patel said currently the organized sector handles only 30 per cent of the marketable surplus. In the interest of both producers and consumers, it is necessary to increase the share of the organized sector (cooperatives, producer companies and private players). “The National Dairy Plan (NDP) has set this target over the next 15 years at 65 per cent. But to achieve this, private companies would need to collect milk directly from producers as is being done by cooperatives and producer companies. Alternatively as is the case abroad, private companies need to explore sourcing their requirement of milk from co-operatives and producer

companies. The co-operatives and producer companies would need to ensure quality, timely supplies and cost effectiveness when supplying milk to private companies,” she stressed. Since sale of liquid milk is likely to contribute to much of the trade in milk in India for quite some years, private companies need to enter the liquid milk market in addition to marketing products. “In future, it will be desirable that private sector and co-operatives work together to ensure that exports take place after meeting the domestic demand of both. If a higher price needs to be paid to match export prices, then this should be paid,” she said.


Beverages & Food Processing Times - December - I - 2013

Chocolate

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Asia’s Chocolate Demand Results in Record Cocoa Output Deficit G

lobal cocoa supplies are headed for the longest production shortfall in more than five decades as chocolate demand surges in Asia. Cocoa use will top output by about 70,000 metric tonnes in the 12 months started 1 October and deficits will persist through 2018—a six-year stretch that would be the longest since the data began in 1960, said Laurent Pipitone, head of statistics at the International Cocoa Organization in London. Prices may rally 14% to $3,200 a tonne by the end of 2014, according to the median of 14 trader estimates in a Bloomberg survey. Global sales of chocolate confectionary will gain 2.1% to a record 7.3 million tonnes next year, after a 2% gain in 2013, estimates Euromonitor International Ltd. Sales in China more than doubled in the past decade, outpacing gains in Western Europe, the biggest consumer. Tighter supplies will mean higher costs for food makers including Nestle SA, Barry Callebaut AG and Lindt & Spruengli AG. Demand for chocolate is great, said Ashmead Pringle, the president of Atlanta-based GreenHaven Commodity Services, which oversees about $340 million. A lot of the world population is moving to the middle-class and will have more money to spend, in particular in emerging markets and Asia. Cocoa climbed 25% this year to $2,796 a tonne on ICE Futures US New York, the second-biggest gain among the 24 commodities tracked by the Standard & Poor’s GSCI gauge, which slid 3.4%. The MSCI All-Country World Index of equities gained 16%, while the Bloomberg Dollar Index, a gauge against 10 major trading partners, rose 3%. The Bloomberg Treasury Bond Index fell 2.8%. Smaller Harvests Dry weather in Ivory Coast and Ghana, the biggest cocoa growers, drove price gains this year even as most commodities slumped. Commerzbank estimates the production declines in West Africa mean this year’s deficit may exceed 100,000 tonnes, or 43% more than the ICCO forecast. Cocoa beans are processed into butter and powder used to make chocolate. In the Asia-Pacific region, home to more than half the world’s population and 12% of chocolate demand, each person will eat 200gm (0.4 pounds) in 2014, double the amount of a decade earlier, according to Euromonitor. Sales in China will rise 6.9% to a record 193,100 tonnes this year and expand 6.6% further in 2014, the researcher said.

Asian demand is dwarfed by the 2.2 million tonnes eaten last year in Western Europe, where per-capita consumption was unchanged from 10 years earlier at 4.5kg. Euromonitor predicts sales in the region will rise 0.5% this year before expanding 0.6% next year. ‘Untapped Market’ China is a huge untapped market that signals more potential for cocoa supply shortages, said Claudio Oliveira, the head of trading at Castlestone Management Llc in New York. The world population will expand by 1 billion people over the next 12 years to 8.2 billion, before reaching 9.6 billion by 2050, the United Nations said in a June report. China and India will remain the most-populous nations, and most of the future growth will be in developing countries, the UN said. Farmers in West Africa, which accounts for about 70% of world output, are struggling to boost production as aging trees curb yield potential, said Francesco Gibbi, a project manager at the Common Fund for Commodities, set up by the United Nations. In Ghana, the largest grower behind Ivory Coast, old trees that yield fewer beans cover about 30% of planted areas, and it takes about three years for new ones to be productive, Gibbi said. The government also said in August it will cut the use of subsidized pesticides by half in the season that began 1 October, raising the risk of pest damage that the ICCO said damages as much as 40% of global crop annually. Ample Rains While drier-than-normal weather may have hurt the crop that’s currently being collected, ample precipitation will boost the next harvest. Ivory Coast growers gather cocoa twice annually, with 70% of production supplied by the larger main crop and the rest by the mid-crop. In November, the country had as much as double the normal rainfall, helping replenish soil moisture, David Streit, an agricultural meteorologist at Commodity Weather Group in Bethesda, Maryland said in a telephone interview. Ghana had as much as 25% above normal rains, he said. Since the start of the season on 1 October, bean deliveries to ports in Ivory Coast were estimated to have risen to 711,000 tonnes as of 15 December, from 498,000 tonnes a year earlier, according to data on the website of KnowledgeCharts, a unit of Commodities Risk Analysis in Bethlehem, Pennsylvania. “We’re just finishing harvesting the main crop, and that was very good,” Adrien Koffi Kauadio, who

farms 4 hectares (9.9 acres) in Gbogue, Ivory Coast, said in a 11 December interview in London. “If the rains come, we could also have a good midcrop.” M a r g i n s Narrow Cocoa accounts for about 10% of the average price of a chocolate bar, the ICCO estimates. One tonne of cocoa makes about 7,250 chocolate bars of 100gm (3.5 ounces) each, according to Commodity Risk Analysis. Nestle SA, the Vevey, Switzerlandbased maker of KitKat and Crunch bars, said on 8 August that profit margins fell in the six months ended 30 June in its confectionery unit amid rising competition and increased spending on marketing in Latin America. Since the end of June, cocoa prices are up 29%. Hershey Co. is betting on rising consumption in Asia, building a $250 million confectionery plant in Malaysia, the region’s biggest cocoa grinder, to help meet its revenue target of $10 billion a year by 2017. Chocolate sales in China are now at about $1.5 billion, chief executive officer John Bilbrey said on an earnings conference call in October. Consumer Tastes For Will Papa, the Hershey, Pennsylvania-based company’s head of research and development, meeting that goal will mean tailoring chocolate recipes to consumer taste in China, where the market is dominated by milky candies. Papa employs a team of 12

scientists and product developers in Shanghai to test new products with local residents, he said in an interview. “Sales of chocolate confectionary in the Asia-Pacific region will expand 5% annually for Minneapolis-based Cargill Inc.,” Job Leuning, the head of cocoa in Asia, said on 4 December in Jakarta. “The company is investing $100 million to open a cocoa- bean processing plant in Indonesia, the third-largest grower. The plant is Cargill’s first in Asia and will have a capacity of 70,000 tonnes,” he said. Hedge funds still expect more price gains. The net-long position almost doubled in the past year to 77,556 futures and option contracts as 10 December, the US government data show. That’s within about 7% of an all-time high reached in November. Delayed Expansion Farmer compensation in Ivory Coast hasn’t kept up with the gain in futures as most of the crop was sold in the first half of this year, before prices rallied. The government said on 2 October that it will pay farmers 3.4%

more for their beans in the main harvest of the season started in October. “That means farmers probably won’t be able to ramp up production until after next year’s harvest, when they’ll receive higher prices and be able to invest in fertilizers and pesticides. Some are planting other crops, including rubber,” farmer Kauadio said. Stockpiles of cocoa at warehouses monitored by ICE Futures US tumbled 36% since this year’s peak in June and are at the lowest since June 2011. “There’s loads of evidence that the amounts of fertilizer, pesticides and spraying being done in both Ivory Coast and Ghana have fallen,” said Edward George, head of soft-commodities research at Lome, Togo-based lender Ecobank Transnational Inc., which finances the cocoa trade in West Africa. “Cocoa still has a long way to go. If you’ve been watching imports into China of chocolate, cocoa powder, cocoa butter, all that, they are rising exponentially. The trend isn’t changing, it’s just intensifying.” Curtsy: Bloomberg


Beverages & Food Processing Times - December - I - 2013

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Beverages & Food Processing Times - December - I - 2013

Indian Agri-Business To Attract PE & VC

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ndia’s agri-businesses are increasingly likely to attract more private equity (PE) and venture capital (VC) funds in the next few years, according to a joint report released by KPMG and the Federation of the Indian Chambers of Commerce and Industry (FICCI). The report, ‘Enhancing Competitiveness of Indian Food Chain’, was released at the inaugural session of the FICCI’s Food 360 conference in November and it suggests that future opportunities for PE and VC firms in the Indian food processing industry are significant. The report states that the food processing industry is expected to grow considerably by the financial year 2014-15 and agri-businesses are predicted to contribute in the region of 6.5 percent annually to India’s gross domestic product. In recent years the sheer size of the Indian agri-business market has precipitated a surge in PE placements and M&A activity. PE investments in the sector have rocketed from just 0.2 percent in 2008 to 3.8 percent in 2012. Furthermore, during the same period, VC investment has grown from 0.2 percent to 1.6 percent of total investments. PE placements in the Indian agri-business sector

also increased from two in 2008 to 12 in 2012. The total PE investment in the sector rose from $38m to $53m during the same five year period. Agri-logistics is another area which has been attracting a great deal of investor attention of late; 2012 alone saw over $60m invested in the sector. According to the report, agriproduct companies with a presence in edible oils and spices have also attracted particularly high levels of investor interest recently, with more than 40 transactions completed in the sector over the last five years. Overall, the agri-business sector in India attracted around $970m worth of foreign direct investment (FDI) between April 2000 and July 2013, and respondents to the joint survey feel that this trend will continue in the near future. “Continuous

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will soon become much more streamlined and integrated, and will play a much more significant role in global markets. However, the industry will only achieve this goal through the “continuous financial and regulatory support from government, increasing participation of private and public corporates” according to Mr Wahi. He adds that the “increasing exposure of foreign players is likely to spur investments in developing the infrastructure across the value chain right from farm inputs to the consumers”. Historically, for Indian food producers wastage has been a particularly troublesome issue. It is estimated that the loss of primary produce before reaching the market due to lack of proper handling, cleaning, sorting, grading and packaging facilities at village level is around 30 to 40 percent for agricultural. Respondents note that problems of wastage still exist at every stage of the value chain. The fractured nature of the supply chain also results in a steep increase in total costs regarding procurement, transit and service charges levied at various layers of the chain. Consequently, the price received by the farmers is only around 25 to 60 percent of what the consumer pays.

financial and regulatory support from government, increasing participation of private and public corporates, and increasing exposure of foreign players is likely to spur investments in developing the infrastructure across the value chain right from farm inputs to the consumers,” said Rajat Wahi , KPMG’s India partner and retail head. Clearly agri-business has already played a key role in helping to develop the Indian economy. However, the industry has still encountered a number of obstacles which have stymied its growth. Indian agri-businesses are currently characterised by high wastage, poor processing levels and a comparatively low global contribution. The hope amongst Indian businesses, however, is that the country’s food value chain

India’s share in the global food trade currently stands at around 1.5 percent. In order to improve upon this position and draw in additional investment, the availability of skilled human resources must be improved. The agriculture industry in India is still in desperate need of highly skilled and trained individuals across different levels to help handle and improve various operations. It is estimated that the Indian food processing industry requires around 530,000 people in the unorganised sector and about 100,000 in the organised sector to handle various food resources at all levels of the supply chain. One of the key recommendations contained within the report suggests that public-private partnerships (PPPs) should be fully embraced as a tool to help accelerate development within agri-business. It is in these structures that PE and VC funding could prove to be particularly useful. Indeed, PPPs have already been successfully deployed in areas such as contract farming, drip irrigation and terminal markets, and it is these sorts of innovative measures which have helped to address the challenges associated with the sector and have begun the process of improving the state of the country’s agrarian market. With increased PE and VC investment, these improvements can continue for years to come.

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Beverages & food december 2013