Food processing industry growth linked to retail

Growth of food processing sector in India is directly linked to growth in retail industry, 14 percent of the growth that comes for the food processing industry is directly linked to retail, according to Subodh Kant Sahai, India Minister for Food Processing Industry.

There was a stage where tomato and potato growers would leave their produce in the markets wasted just because it would be more costly for them to take them back. But with progress in the food processing industry, things are changing. The political mindset also has to undergo a transformation in viewing Retail business as directly benefitting the farmers and providing opportunities for Agri-business. Speaking at the National REtail Summit-2010-"Modern Retail: Towards Sustainable Growth and Profitability." Sahai said that the Union Government is coming out with a series of initiatives to increase the share of Modern retail in the country.

Sahai stated that the centre has planned to upgrade 70 cities in India by 2012 having all the modern facilities that of metros like Mumbai and Delhi. "With the amendment of the Agriculture Produce Market Act or the APMC act, farmers would become the largest beneficiaries. With 70 percent of our population also dependent on agriculture this would also get in 3rd party investors interested in Retail to patronize the farmers," he said. According to Mr Sahai growth of the food processing industry is directly linked to the growth in retail industry. ".

Sunil Dattatraya Tatkare, Minister for Finance and Planning, Government of Maharashtra pointed out that the Indian economy had survived the heat of the economic meltdown thanks to the resilience in the consumption pattern. "In the past 4 years, there has been a 75 percent increase in the consumer spending." He said. The state minister also added that India has become the 5th largest retail destination in the world with retail contributing 12 percent to the GDP with 7 percent of population is directly employed in this industry.

Sahai along with Tatkare also released a consumer confidence report-''CII-IMRB India Consumer Confidence Report 2009'' on the occasion. Puneet Avasthi, Vice President- Retail, IMRB international while speaking on the report stated that the objective of the report was to understand the impact of the economic slowdown and consumer outlook in terms of shift in consumption in value and volumes.Avasthi pointed out that the report indicates that consumers hold onto spends in basic necessities - groceries and apparel and cutting down on investments, entertainment and lifestyle categories. "The consumer is also willing to trade off quality as prices increase for qualities such as milk products, edible oil, staples, spices, pulses and processed foods," he said. The report also indicates huge potential in products like tea & Coffee, OTC and fruits and vegetables as consumers are looking for better quality even as the prices increase. "For personal care products, consumer continues to seek quality but manages the budget through portion control and management of volumes," Avasthi stated.

Raising some of the issues faced by the retail industry, B S Nagesh, Vice Chairman- Shoppers Stop Ltd said that profitability for the industry is not possible without sustainability. "The margins are wafer thin and the costs are escalating, Maharashtra at this stage needs to come out with a retail policy to increase the share of Modern retail," he said. "We also need to understand that when manufacturing can happen for 24 hours and 365 days a year, then why can''t We have a similar pattern for retail as well," he said. Thomas Varghese, Chairman, CII National Committee on Retail and CEO- Aditya Birla Retail Ltd explained that Indian Retail has the potential of reaching net worth of $535 billion by the year 2013 from the current $410 billion. "Modern retail is still at a nascent stage representing just 5 percent of the share, employing 700,000 people today being the third largest after agriculture and textiles.

The sector has the potential to employ around 6.8 million people by 2018," he said. Varghese stated that other that creating jobs, it also is a one of the largest tax payer to the government. "The sector today has reduced the proliferation of adulterated goods in the economy and ensured a supply of quality products," he added


Source: commodityonline.com