Dried and Preserved

Dried and Preserved Vegetables
Chapter 1
Introduction and Research Methodology

1.1 Introduction
India is the worlds second largest producer of food next to China, and has the potential of being the biggest with the food and agricultural sector. The food processing industry is one of the largest industries in India-it is ranked fifth in terms of production, consumption, export and expected growth. The food industry is on a high as Indians continue to have a feast. Fuelled by what can be termed as a perfect ingredient for any industry large disposable incomes - the food sector has been witnessing a marked change in consumption patterns, especially in terms of food. The food processing industry in the country is on track to ensure profitability in the coming decades. The sector is expected to attract phenomenal investments of about Rs 1,400 billion in the next decade.
1.1.1 What is Food Processing?

Food processing is the set of methods and techniques used to transform raw ingredients into food or to transform food into other forms for consumption by humans or animals either in the home or by the food processing industry. Food processing typically takes clean, harvested crops or butchered animal products and uses these to produce attractive, marketable and often long shelflife food products. Similar processes are used to produce animal feed.
1.1.2 India has the following advantages in the Food Processing Sector:
India is one of the largest food producers in the world. India has diverse agro-climatic conditions and has a large and diverse raw material base suitable for food processing companies. India has huge scientific and research talent pool. A largely untapped domestic market of 1000 million consumers. 300 million upper and middle class consume processed food. 200 million more consumers expected to shift to processed food by 2010. Well developed infrastructure and distribution network. Rapid urbanization, increased literacy, changing life style, increased number of women in workforce, rising per capital income- leading to rapid growth and new opportunities in food and beverages sector. Strategic geographic location (proximity of India to markets in Europe and Far East, South East and West Asia)
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1.1.3 Factors Driving Demand for Processed Foods

Changing age profile - A relatively larger share of young population which has the ability to spend on processed foods Increase in income - The middle and upper middle income groups growing at a faster rate than in developed countries resulting in higher spending on food and also switching over to animal protein and processed foods from staples. Social changes - Increasing number of working women. Life style factors - Increasing health consciousness and need for convenience food. Organized Retail outlets - These provide the much needed forward linkages.
1.1.4 Dried and preserved Vegetables

Vegetable processing in India is almost equally divided between the organized and unorganized sectors, with the organized sector holding 48 per cent of the share. While products like juices and pulp concentrate are largely manufactured by the organized sector, the unorganized sectors foot hold is in the traditional areas of processed items like pickles, sauces and squashes. By size, pickles form the strongest category. The installed capacity of vegetable processing industry has increased from 1.11million tones in 1993 to 2.33 million tones in 2004. Over the last few years, the industry has seen a positive growth in ready-to-serve beverages, dehydrated and frozen vegetable products, pickles, processed mushrooms and curried vegetables. The government expects the processing in this sector to grow to 10 per cent in 2010 and 25 per cent of the total produce by 2025. Most of the units engaged in above are currently export oriented. Domestic consumption of processed vegetable products is low, indicating a potential for growth through increased penetration of the domestic market. India is the major producer of dried & Preserved Vegetable Like Preserved Onions, Cucumber & Gherkins, provisionally preserved, Mushrooms of the gensus agaricus, Other mushrooms and truffles, Green Pepper in Brine, Dried Truffles, Asparagus Dried, Dehydrated Garlic Powder, Dehydrated Garlic Flakes, Garlic Dried, Potatoes Dried, Grams, Grams Dal, Onion Prepared/Preserved etc. Many non-traditional vegetables mainly processed cucumber and gherkins and other vegetables produced like asparagus, celery, bell pepper, sweet corn, green and lime beans and organically grown vegetables are also being increasingly exported.
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1.2 Literature Survey

1.2.1 Processed food industry
Among the various industrial sectors, food processing is somewhat unique in that, unlike others, it covers a fairly broad spectrum of products based on a wide range of raw materials from agriculture. As much, for a country like India, endowed with diverse climate regions and a long coastline and producing a variety of crops, fruits, vegetables, flowers, livestock and seafood, this sector has not only a great potential but is also of significance in improving the rural economy. In fact, food processing as such is not new in India. It has been carried on for centuries but by adopting low-cost homegrown technologies. However, in the early 1980s the Government of India felt the need for sustained and organized efforts to give a boost to this sector, with the twin objective of reducing wastage of, and adding value to, farm produce and setting up an exclusive Department of Food Processing Industries in the Ministry of Agriculture. From all accounts the initiatives taken since then have led to a positive growth in this sector. This is evident from the number and variety of bakery and confectionery products, snacks and drinks available in the market under different brand names and from the increasing interest evinced by private entrepreneurs in this sector. Still, as against the potential, the present level of processing is admittedly too low. Right now only two percent of the fruits and vegetables produced in the country are now processed, as compared to 30 per cent in Thailand, 70 per cent in Brazil, 78 percent in Philippines and 80 per cent in Malaysia. The value addition in the food sector in India is a mere 7 percent. The output of fruits and vegetables is projected to increase substantially in the coming years. Currently it constitutes 6.6 percent of total food grain production and this figure is expected to reach 80 per cent by the year 2010. Now there is huge increment is expected in food processing from 2% to the 10 percent by the year 2010 and 25% by the year 2025 thanks to the government policies initiated by the food ministry. Set for a quantum jump- The development of the food processing sector assumes importance in the context of the liberalized global trade regime under the WTO agreement ---B. S. Padmanabhan (Noted critic), The Hindu 2006. Liberalization has brought in through the entry of large multinational and transnational corporations, foreign investment in this sector. This resulted in competition, technological upgradation and market expansion. In the face of the competition, domestic Industries are gradually losing market share and thus selling their businesses to the new entrant MNCs well before the value of the brand and businesses drops further due to ongoing onslaught of multinational brands. This is happening because MNCs have much eater resources to put behind their brand and business and also have long term vision and sustainability. Domestic industries
are no comparison. Globalization has changed the Indian Processed Food Industrys scenario by bringing in the Worlds best known multinational brands ----R. Seshasayee, president, Confederation of Indian Industries, 2006. Technology and research play very vital role in the development of Processed Food Industry and the role of technology and research can not be ignored since the consumers are price conscious and they are equally quality conscious, so company must ensure the quality of the product which can only be possible with the help of latest updated technology. Technology is playing its role to ensure quality in Processed Food Industry ----Prof. V. Subramaniam, first Director of CFTRI (Central Food Technological Research Institute), 2006. Consumers improved life standard and their earnings are making the packaged food business more demanding and challenging. And for the big giants like ITC and HLL cost of the acquisition does not bother them at all. I have an open mandate for acquisitions, and for a company like ITC, money to buy companies is not an issue," ----Ravi Naware, divisional chief executive (foods), ITC, 2006.
1.3 Objectives of the study

1.3.1 Key objective:
The main objective of this report is to conduct a study on dried and preserved vegetables throughout India and also about the export prospects.
1.3.2 Sub-objectives:
The report will give an idea to improve the infrastructural needs which will result in better preservation and thereby meeting the export value. Making food processing sector in India an attractive sector for investment and offers significant growth potential to investors. To highlight the importance of the most crucial challenge today, that the Indian food processing industry is facing is the lack of suitable infrastructure.
1.4 Scope of the study

The report covers the following areas:
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Historical data on exports, production and productivity of dried & Preserved Vegetable Like Preserved Onions, Cucumber & Gherkins, mushrooms and truffles, Green Pepper in Brine, Dried Truffles, Asparagus Dried, Dehydrated Garlic Powder, Dehydrated Garlic Flakes, Garlic Dried, Potatoes Dried, Grams, Grams Dal, Onion Prepared/Preserved, processed cucumber and gherkins and other vegetables produced like asparagus, celery, bell pepper, sweet corn, green and lime beans. Information about main varieties grown in India. Country-wise export statistics giving export quantity and value for the years 2007-2008, 2008-2009,2009-2010. Exim policy, and export promotion council for processed food (APEDA). Detail study on issues in focus which are related to dried and preserved vegetables sector like infrastructure, taxation, research and development, packaging etc. Report also covers the government initiative schemes which are formed because of various developments needed in this sector. Statistical Data Analysis and Discussion of Results are been recorded in the study by using different methods of data analysis. Swot analysis is been designed for the dried and preserved vegetables sector.
1.5 Period of the study

The period of the study is confined to four months that is in the year 2011. As per the given schedule everything is been analyzed and a detailed report is prepared.
1.6 Data Collection

1.6.1 Primary data:
For this study there is no primary data available.
1.6.2 Secondary data:

Data someone else has collected is known is secondary data. Secondary data were collected through websites, magazines, newspaper articles, periodic journals, data bases, Indias statistical reports, Exim bank reports etc.
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1.7 Statistical tools for data analysis

1.7.1 Correlation analysis:
Correlation analysis is the statistical technique that measures the strength of association between two variables (i.e., by finding the coefficient of correlation and the coefficient of determination).To Obtain Correlation Coefficient of y and x, refer to the above output, the correlation coefficient = r. Comment/Interpretation of the Value of r:
The Range
r = 1 1< r 0.8 0.8 < r 0.5 0.5 < r < 0 r=0 0 < r < 0.5 0.5 r < 0.8 0.8 r < 1 r=1
Interpretation
Perfect negative correlation Strong negative correlation Fair negative correlation Weak negative correlation No correlation Weak positive correlation Fair positive correlation Strong positive correlation Perfect positive correlation
1.7.2 REGRESSION ANALYSIS:

1.7.2.1 Description of the technique Regression analysis is the statistical technique that identifies the relationship between two or more quantitative variables: a dependent variable whose value is to be predicted, and an independent or explanatory variable (or variables), about which knowledge is available. The technique is used to find the equation that represents the relationship between the variables. A simple regression analysis can show that the relation between an independent variable X and a dependent variable Y is linear, using the simple linear regression equation Y= a + bX (where a and b are constants). Multiple regression will provide an equation that predicts one variable from two or more independent variables, Y= a + bX1+ cX2+ dX3. 1.7.2.2 Purposes of the technique Regression analysis is used to understand the statistical dependence of one variable on other variables. The technique can show what proportion of variance between variables is due to the
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dependent variable, and what proportion is due to the independent variables. The relation between the variables can be illustrated graphically, or more usually using an equation. 1.7.2.3 Strengths and limitations of the approach 1.7.2.3.1 Strengths Regression analysis provides an opportunity to specify hypotheses concerning the nature of effects (action theory), as well as explanatory factors. When it is successfully executed (with a statistically valid adjustment), regression analysis can produce a quantitative estimate of net effects. 1.7.2.3.2 Limitations The technique is demanding because it requires quantitative data relating to several thousand individuals. Implementing the data collection can be time-consuming and expensive. Regression analysis is likely to reach the conclusion that there is a strong link between two variables; whereas the influence of other, more important, variables may not have been estimated (this error is called "data snooping"). The tool should therefore be used with care. Relations between the different explained and explanatory variables are often circular (X explains Y and Y explains X). In this case, the method is inapplicable.
1.8 Limitations of the study:

Primary data is not collected. Only two tests are performed under statistical data analysis that is correlation and regression analysis. Report is not concentrated on import prospects because India is the 2nd largest producer of vegetables and it has wide scope in exports.
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Chapter 2
Profile of the Industry

2.1 Introduction
Almost all vegetable processing is highly automated, and because new plants are more fully automated they are also more capital intensive. Some new processing techniques - such as retort cooking - have been introduced into vegetable processing. However, the major innovations in technology have been associated with sorting and grading vegetables for processing and in packaging, handling and storage of processed vegetables. Packaging, innovations, such as microwave-proof plastic that provides an extended shelf life.
2.1.1 Why India?

Largest Global Consumer Market of 1.2 bn with over 600 mn consumers below the age of 40 yrs. 3rd Largest farm producer globally with a potential to become the major Food Bowl to the world.(601 Ml. Tons) Large Scale Modernisation & Up-gradation in technology & systems being embraced by Food Processing Companies in India very rapidly. Continuous high growth in the Food Processing market through the global recession.
2.1.2 Varieties
The major varieties under Dried and Preserved Vegetables products are as follows Mushroom (Button Mushroom, Oyster Mushroom, Paddy straw mushroom and milky mushroom) Garlic (Agrifound White (G-41), Yamuna Safed (G-1), Yamuna Safed 2 (G-50), Yamuna Safed 3 (G282), Agrifound Parvati (G-313) and Yamuna Safed 4 (G 323).
2.1.3 Individual products under this sub head are

Preserved Onions Cucumber & Gherkins, Mushrooms of the gensus agaricus, Other mushrooms and truffles, Green Pepper in Brine, Dried Truffles, Asparagus Dried, Dehydrated Garlic Powder, Dehydrated Garlic Flakes, Garlic Dried, Potatoes Dried, Grams, Grams Dal.
2.1.4 Areas of cultivation and processing:
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The raw vegetables are typically grown in field conditions and are mainly grown in the states of jammu & kashmir, Himachal pradesh, hilly regions of north Uttar Pradesh, TamilNadu, Maharashtra, karnataka, Gujarat, Andhra Pradesh, Assam, Madhya Pradesh, Rajasthan, Punjab, Tripura, West Bengal and Orissa .
2.1.5 Industry volatility

Industry revenue volatility is medium Changes in the price and supply of fresh fruits and vegetables are the primary sources of volatility in this industry. Competition from substitute foods, in particular fresh fruit and vegetables. Fluctuating average real wages, which impacts on affordability. Climatic conditions affect the quality and quantity of raw material supplied, although this is lessened by growth in horticulture.
2.2 Key Factors

2.2.1 Key Sensitivities:
The key sensitivities affecting the performance of the Global Fruit and Vegetables Processing and preserving industry include: Competition from Substitutes - Fresh Fruit and Vegetable Wholesaling Consumers may go through phases of preferring fresh fruit to the canned alternative, but processed fruits are more convenient for some. Domestic Goods Prices - Agricultural - Horticulture - Fruit The price of raw materials supplied has some impact on value added and profitability, but most industry participants buy cheap fresh fruit and vegetables from developing countries. Domestic Goods Prices - Vegetables The price of raw materials supplied domestically has some impact on value added and profitability, but most industry participants buy cheap fresh fruit and vegetables from developing countries. Downstream Demand-Other Grocery and Related Product Wholesalers This industry is a key source of demand for processors' products, and so manufacturers are sensitive to its level of activity. Nutrition - Vegetable Consumption Nutritional information made available to consumers may either assist or hinder industry growth, depending on its content.
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For example, medical research might show that some processed vegetables are just as healthy as their fresh counterparts. Nutrition - Fruit Consumption Nutritional information made available to consumers may either assist or hinder industry growth, depending on its content. For example, medical research might show that some processed fruits are just as healthy as their fresh counterparts. Population Growth - World Population growth affects the fruit and vegetable processing industry. Strong growth will increase the retail demand for processed fruit and vegetables, impacting upon the demand at the manufacturing level.
2.2.2 Key Success Factors

The key success factors in the Global Fruit and Vegetables Processing and Preserving industry are: Marketing of differentiated products A diversified range of products enables high capacity utilization, rather than seasonal operation only. It also assists with brand recognition. Ability to quickly adopt new technology Adoption of new technology will raise productivity and improve product quality. Upstream vertical integration (ownership links) Linkages to suppliers, either via ownership or through contracts, will ensure raw materials are available at an inexpensive rate. Access to high quality inputs This holds some importance for processors since firms compete strongly with respect to product taste. Attractive product presentation This is an important way of generating brand recognition, and hence, maximizing sales.
2.3 Exports
Indian exports primarily comprise of vegetables in the raw form and primary processed products, with low price realizations. Processed vegetables have shown a low CAGR of 7 percent. Key barriers to exports include: Price competitiveness Wide fluctuations in prices of Indian F&V products as compared to South America, which offers more stable prices.
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Distance
Freight cost and shelf life are key constraints to success in export markets for many F&V Phytosanitary In the post WTO period, especially since 1996-97, the complexity of requirements SPS regime has significantly constrained market access in developed countries for Indian F&V products. Climate and seasonality Subject to seasonal fluctuations and short season of availability Small size of industry There is a need to have a certain turnover to be viable as an export and participants operation. Indian exporters lack scale and hence competitiveness. This leads to low investments in upgrading skill and quality, product innovation and brand building. Fragmented nature of the The industry is fragmented. Hence, exporters are unable to establish industry themselves as long-term players. Raw material supply and Quality raw material for processing value added F&V meeting quality inconsistencies international standards is not available. Even when available, the cost of raw material is very high. Certification Increased compliance costs and lack of established quality parameters. Lack of market Lack of information about international requirements to a large intelligence and statistical number of data Producers. Packaging Poor packaging due to high costs and low innovation in packaging.
2.3.1 Indian Exports to some developed markets in the year 2009-10 are as follows:
2.3.1.1 United States: Exports from India Dried and preserved vegetables Other fresh vegetables Fresh onions Quantity(Mt) 26447 4504 58.17 Value (lacs) 9061 1815 9.26
Imports from the world: 5th largest imported vegetable is fresh/chilled tomatoes for US.
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2.3.1.2 United Kingdom: Exports from India Dried and preserved vegetables Other fresh vegetables Fresh onions 2.3.1.3 Australia: Exports from India Dried and Preserved Vegetables Other fresh vegetables Fresh Onions Quantity(Mt) 3973 19795 2108 Value (lacs) 2573 8098 290
Quantity(Mt) 4632.81 2381.57 11.0
Value(lacs) 18411 740 1.85
2.3.1.4 Canada: Exports from India Dried and Preserved Vegetables Other fresh vegetables Fresh Onions Quantity(Mt) 3490.24 3190.07 282.91 Value(lacs) 2028.64 1198.67 40.59
2.3.1.5 France: Exports from India Dried and Preserved vegetables Other fresh vegetables Fresh onions Quantity(Mt) 18098.34 1158.82 190.54 Value (lacs) 6124.53 468.25 20.97
2.3.1.6 Japan: Exports from India Dried and preserved vegetables Other fresh vegetables Fresh Onions Quantity(Mt) 580.49 199.97 33.00 Value (lacs) 223.84 18.70 4.58
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2.4 Imports
1) India mainly imports: a. Preparations of vegetables b. Prepared/preserved tomatoes c. Prepared/preserved frozen potatoes 2) Exports had a negative annual growth of 22.27 per cent during 2007-08, even though imports continued to grow at 9.91 per cent over the previous year 3) Import of fresh fruits has grown by 217 per cent from 2004-05 to 2007-08(Apples top the list) 4) India is a net importer of fruits and vegetables with imports exceeding exports by over 1.7 million tons 5)Indian processing industry is acquiring strengths so trend is towards a scenario where India imports raw materials and exports value added products.
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2.5 Issues in Focus:

2.5.1 R&D
Linkages are needed between R&D institutions, farmers, extension machinery and industry. Based on preferences of Indian consumers and export demands, R&D institutions need to address parameters of varietal relevance including physical, chemical, taste, flavor & spoilage. Research needs to be able to further offer scalable models, which are effectively disseminated, commercialized and adopted by farmers. R&D also needs to focus on stretching the production season of many fruit and vegetable crops. This can contribute to increase availability of raw material over longer periods, resulting in utilization of assets over longer season, and resultant increase in overall profitability. SHG or Neighborhood Groups (each group with 10-20 farmers) proposed in the Food Park Scheme in the food/ vegetable production system can act as agency for transfer of technology, adopting best practices to improve productivity and quality to meet the market needs. These new varieties can be introduced, in association with private sector players to overcome the limitations of traditional extension machinery and provide an assured market to farmers for their produce. Research on packaging needs to be stepped up to arrive at cost-effective superior packaging technology, which enhances shelf life, protects food, is internationally acceptable and has no deleterious effect on the environment and health.
2.5.2 Lack of varieties suitable for processing

Varietal constraint is one of the major factors associated with several fruits and vegetables. Many varieties of fruits and vegetables are unsuitable for either export or processing. Cases in point are Nagpur oranges and Mangoes from Malihabad. The main reason for lack of suitable processable varieties is the disconnect between R&D, market and extension machinery of the government. As a result, R&D is carried out in isolation, without alignment to market requirements. Further, due to ineffective extension machinery, farming systems and technologies, they are not effectively disseminated and commercialized. Often, research has also failed to offer scalable models.
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2.5.3 Low productivity levels: Indian yields are lower when compared to other key producers of F&V like Brazil and China (Fig 3&4). Exceptions can be seen in the case of Grapes and Banana, where the yields are amongst best as a result of introduction of new high yield varieties and their adoption by farmers. However in fruits like mango, farmers continue to grow low yielding varieties. 2.5.4 Short Production Season for Vegetables and Fruits: Short production season for Fruits and Vegetables restricts availability of raw material for F&V processing industry. Due to this seasonal nature, assets remain idle over long periods of time. Stretching the production season of many fruit and vegetable crops will have the potential to dramatically affect availability of raw material for F&V processing industry. Increased use of technologies to stagger flowering, varietal changes etc. will become necessary to achieve these. 2.5.5 Packaging: Another area of concern for R&D is the packaging sector. Cost of packaging currently forms 35-40% of the end product cost. High quality packaging calls for expensive raw material and machinery. Research on packaging therefore needs to focus on arriving at low cost solutions besides permitting import of packaging material, machinery at low rates of duty.
2.5.6 Infrastructure
Inadequate infrastructure has been identified as a major constraint in the growth of fruit and vegetable processing industries. Without a strong and dependable cold chain, a vital sector like F&V processing industry, which is based mostly on perishable products, cannot survive and grow. Even at currents level of production, wastage in F&V is estimated at 35%, major reasons being inadequate storage, transportation, cold chain facilities and other infrastructure support facilities. Foster public-private partnerships for infrastructure creation and technology upgradation Involve Project Management Agencies to assist the Ministry in implementation of the Projects Cluster approach to be adopted to deal with the fragmented holdings and SMEs which dominate the sector Facilitate development of integrated cold chain (from farm to market) by providing incentives to private investment. Government of India has been implementing several schemes for facilitating creation of infrastructure for food processing including the following components relevant for F&V processing sector:
Food Parks Packaging Centers Integrated Cold Chain Facility Value Added Centers and Irradiation Facilities.
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2.5.7 Taxation
On Food processing equipment, plant and machinery manufactured locally Central
Excise Tax may be reduced from 16% to 8%.

To encourage investment in cold chain infrastructure, investments in it may be given a
tax holiday for 5 years. Cold chain equipment may be exempt from CET. Customs duty on cold chain may also be reduced from 12.5% to 5%.
It is suggested to reduce excise duty on OTS cans for food products from 16-8%. A single flat tax rate under VAT may imposed on all food items across states. This needs
to be taken up with the Empowered Committee of Finance Ministry.

Current income tax exemption of 100% in the first 5 years and 25% in the next 5 years
may be continued for newly set-up food processing plants in general and F&V plants in particular.
2.6 Government Initiative

Ministry created for food processing as well as various department like,apeda(agriculture and processed food export development authority) has been set up for the promotion of export activities. Most of the processed food items have been exempted from the purview of licensing under the Industries (Development & Regulation) Act,1951,except items reserved for small-scale sector and alcoholic beverages; Food processing industries are included in the list of priority sector for bank lending in order to ensure easy availability of credit to them. Most of the items can be freely imported and exported except for items in the negative lists for imports & exports). Free trade zones (FTZ) and export processing zones (EPZ) have been set up with all necessary infrastructure. Also, setting up of 100% Export oriented units (EOU) is encouraged in other areas. They may import free of duty all types of goods, including capital foods. Units in EPZ / FTZ and 100% Export oriented units can retain 50% of foreign exchange receipts in foreign currency accounts.50% of the production of EPZ / FTZ and 100% EOU units are saleable in domestic tariff area. All profits from export sales are completely free from corporate taxes. The government has established of mega food parks in different parts of the country, which will be run by a Special Purpose Vehicle created by all the stakeholders to create an integrated value chain from the farm gate to the consumer Another strategic initiative taken in India is to establish cold chain facilities including refrigerated vans all over the country, to provide relief to the farmers, to enhance the
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shelf life of their product and retain its quality second hand ones in the food processing sector 100% FDI permitted on automatic route Customs duty on food processingmachinery and their parts is being reduced from 7.5% to 5% a, Custom duty on Packaging Machine to be reduced from 15% to 5%.
2.6.1 Schemes of The Government 2.6.1.1 Schemes for Market Development Financial assistance in Packaging(Activity for development of packaging standards and design, Upgradation of already developed packing standards)Assistance for conducting feasibility studies etc.50% of the total cost subject to a ceiling of Rs 5.00 lakh per beneficiary in accordance with MDA/MAI guidelines, Brand publicity (Product specific Indian Brands) through advertisement etc. Brand promotion for those brands which are of Indian origin , advertisement in international print/electronic media, website development etc.(25% of the total cost subject to a ceiling of Rs 50.00 lakh in a year on reimbursement basis subject to auditing of the accounts. Not to be extended to an exporter beyond 3 consecutive years. Norms for providing assistance would be framed by APEDA) 2.6.1.2 Schemes for Infrastructure Development Establishment of common infrastructure facilities by APEDA or any other Government or Public Sector agency like Airport Authority of India or Port Trust etc.(100% grant in aid) Promotion of Quality and Quality Control Assistance etc. for setting up/strengthening laboratories 25% of the cost subject to a ceiling of Rs 20 lakh per beneficiary. Quality standards should be adhered to for availing the subsidy Up gradation and recognition of labs for export testing (50% of the cost for private labs;100% for the Central Government labs) Assistance for up gradation of technical and managerial skills through on spot training in India/abroad 100% of cost of the programme organized by APEDA subject to a ceiling of Rs 1.5 lakh per representative (not more than three from single organization) 2.6.1.3 Schemes for Research and Development Assistance for technology development through R & D efforts with research institution under Government/Public Sector (100% in case of APEDA).
Assistance to recognized exporters associations of APEDA to support relevant research and development for export enhancement through R & D organizations in co operative/private sector (Upto 50% of the total cost of the project subject to a ceiling of Rs 20 lakh).
2.7 EXIM Policy

EXIM Policy is the export import policy of the government that is announced every five years. It is also known as the Foreign Trade Policy. This policy consists of general provisions regarding exports and imports, promotional measures, duty exemption schemes, export promotion schemes, special economic zone programs and other details for different sectors. Every year the government announces a supplement to this policy. The EXIM Policy of 2002-2007 emphasized the importance of agricultural exports and announced measures like the setting up of agri export zones, removal of procedural restrictions and marketing cost assistance. Agri Export Zones are considered the most important creation of this policy.
2.8 Agri Export Zones

Agri Export Zones were formed as a result of this policy. These zones are meant to promote agricultural exports from the country and provide remunerative returns to the farming community regularly. They are to be identified by the State Government, which would evolve a comprehensive package of services to be provided by all State Government agencies, State Agriculture Universities and all institutions and agencies of the Union Government for intensive delivery in these zones. Corporate sector companies with proven credentials would be encouraged to sponsor new agri export zones or take over already notified agri export zones. Services that would be managed and coordinated through this scheme include the provision of pre/post harvest operations, plant protection, processing, packaging, storage and related research and development. APEDA will supplement, within its schemes and provisions, the efforts of State Governments for facilitating exports. Click here for a list of the Agri Export Zones. After, a change of government at the centre, a new EXIM Policy of 2004 2009 was announced. This policy came up with export promotional measures such as Towns of Export Excellence, Target Plus, Free Trade and Warehousing Zones and the Vishesh Krishi Upaj Yojana.
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2.9 Indian Policies

Though no industrial license is required for setting up Fruits & Vegetable processing industries, setting-up 100%EOUs require specific Govt. approvals. This sector is regulated by the Fruit Products Order, 1955(FPO), issued under the Essential Commodities Act. The Department of Food Processing Industries administers this order. The order lays down product specifications and quality control requirements on production-hygiene, relabeling and marketing of processed fruits and vegetables. All processing units are required to obtain a license under this order. Periodic inspection of units is also carried out. In addition, consignments of fruit & vegetable products intended for export are subject to pre-shipment inspection under the FPO. Recognized Export Houses and Star Trading Houses are however exempted from this inspection. Some items like: pickles & chutneys, tapioca sago and tapioca flour are reserved for exclusive manufacture in the small scale sector. Export of fruit & vegetable products is freely allowed. Many fruit and vegetable processing industries are eligible for automatic approval of foreign technology agreement and upto 51% foreign equity participation. These include: tomatoes, mushrooms and other frozen vegetables, fruit, nuts, fruit-peel, fruit jellies, marmalades, fruit juices and vegetable juices etc.
2.10 APEDA Export promotion organization

The Agricultural and Processed Food products Export Development Authority (APEDA) is an export promotion organization under Ministry of Commerce & Industries, Government of India. It is mandated with the responsibility of promotion and development of the export of its scheduled products. The Agricultural and Processed Food Products Export Development Authority (APEDA) was established by the Government of India under the Agricultural and Processed Food Products Export Development Authority Act passed by the Parliament in December, 1985.The Authority replaced the Processed Food Export Promotion Council (PFEPC). In accordance with the Agricultural and Processed Food Products Export Development Authority Act, 1985, (2 of 1986) the following functions have been assigned to the Authority. Development of industries relating to the scheduled products for export by way of providing financial assistance or otherwise for undertaking surveys and feasibility studies, participation in enquiry capital through joint ventures and other reliefs and subsidy schemes.
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Registration of persons as exporters of the scheduled products on payment of such fees as may be prescribed. Fixing of standards and specifications for the scheduled products for the purpose of exports. Carrying out inspection of meat and meat products in slaughter houses, processing plants, storage premises, conveyances or other places where such products are kept or handled for the purpose of ensuring the quality of such products. Improving of packaging of the Scheduled products. Improving of marketing of the Scheduled products outside India. Promotion of export oriented production and development of the Scheduled products. Collection of statistics from the owners of factories or establishments engaged in the production, processing, packaging, marketing or export of the scheduled products or from such other persons as may be prescribed on any matter relating to the scheduled products and publication of the statistics so collected or of any portions thereof or extracts therefrom. Training in various aspects of the industries connected with the scheduled products. Such other matters as may be prescribed.
2.11 Competitor Approach

Large acreage - The competitors use harvest combines for harvesting the produce hence making the produce lower in cost and fresh as well. High Subsidies - Lots of subsidies are given by competing countrys governments which make their products cost competitive. Low Inland transportation cost - Competing countries do not face the high Inland transportation cost as compared to the Indianexporters. For e.g. in case of exporting peas, since most of the peas are grown in Punjab and Uttar Pradesh it costs approximately Rs 5-6per kg to bring the produce to Mumbai port. This makes the export option unprofitable and unviable. Image of the competing country is better as compared to India - Image of India is quite poor as a food processor. Hence,Indian produce has few takers and it is looked upon as that of low quality. Good varieties The competing countries grow varieties which ripen very fast. Good packaging techniques - Competitors have advanced packing techniques making the product attractive. Huge investment in infrastructure - The competitors have good infrastructure to support the seamless export. World class processing plant - The processing plants in competing countries have much more capacity as compared to the Indian plants.
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2.12 SWOT Analysis

2.12.1 STRENGTHS 1) The vegetable industry is large. 2) It gives employment to a large number of people, especially in the rural India. 3) The sector experiences a constant demand. a. Internal demand has always been high as the Indian prefer the fresh vegetables to processed foods b. External demand as India is a leading producer of fruits and vegetables. To an extent that it is also known as the fruit and vegetable basket of the world. (a leading exporter of onions) 4) Advances in technology and government initiatives support the development of the sector 5) Onion is the fourth most important commercial vegetable crop 6) The export of Onion products has increased from Rs 1035.78 Crores in 2007-08 to Rs 1827.52 Crores in 2008-09. 7) Major Export Destinations (2008-09):Bangladesh, Malaysia, UAE, Sri Lanka, Pakistan 8) Indias export of other Fresh vegetable has increased from Rs. 489.49 Crores in 2007-08 to Rs 680.2 Crores in 2008-09. 9) India also exports dried vegetables for example: cucumber, onion, potatoes, mushrooms, garlic asparagus etc. 2.12.2 WEAKNESSES 1) Lack of government support. 2) Shift of labour force from agriculture to non-agriculture in India is peculiarly slow: rigid labour laws in both the agricultural and industrial sectors. 3) Reforms in agriculture, in particular: trade liberalization, export promotion strategies. 4) Level of spending on agriculture does not translate into a significantly higher sectoral performance
5) Inadequate road linkages remain a major constrain for the development of well-functioning agricultural markets. 6) A continuing fragmentation of: Land-holdings, Poor maintenance of existing irrigation systems, declining soil fertility in some areas are other factors. 7) Seasonality and the fact that agricultural sector output heavily depends on the annual monsoon 2.12.3 OPPORTUNITIES 1) Grow white & yellow onions to export to European markets increase share in Malaysia, Singapore & Gulf Improve packaging 2) Export processed Asparagus, Celery and baby corn to other countries. 3) Special package can be given to farmers for growing high value vegetables. 4) Reduction in air freight and adequate cargo space. 5) Better cold storage facilities, hygienic and vacuum packs 6) Canned, bottled and dehydrated vegetable export. 2.12.4 THREATS 1) Value addition to food fortification: 7% India, 23% China, 45% Philippines, 188% UK. 2) External liberalization poses threats of stiffer competition under a new world trade order. 3) Advances in bio-technology have enabled production of Genetically Modified (GM) foods. 4) Poor global marketing- Indian brands have yet to acquire an image in the international markets. 5) No suitable insurance schemes for such exports of perishables. Hence, The banks face considerable credit risks. 6) Poor marketing, transport and communication infrastructure. 7) Some issues like different MRL by member countries for pesticide, drugs and other contaminants. 8) Highest Taxes on processed food in India. 9) Excise duty, Sales tax, octroi, mandi samiti, entry tax and customs duty, levied by the Central/State/Local bodies. 10)Preservatives which are added for processed food is not good for health. It causes many diseases.
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2.13 Problems faced by Indian exporters

The main problem area of Indian exporters is that there is lack of information flow in the value chain regarding product specifications,packaging, labelling, and quality standards as per the International demand. Infrastructure there is lack of infrastructure it is estimated that half of the food is wasted in transportation besides this there are lack of cold storage facilities etc Certification to export to other countries especially in developed countries an exporter need to obtain certificate from importing country agency as developed countries dont accept certification of quality issued by Indian agencies. Subsidy - developed countries provide large amount of subsidy to there farmers (which reduce the cost for food processing) also to the agro industry in USA the average subsidy per egg is around 50cents while same in India is around 40paise. Bureaucratic Hurdles food processing industry is cover in more than 4 ministries and for setting food processing unit you have to take approval of 20 different ministries and follow age old labour laws. Lack of food testing lab in India there are very limited food testing lab in india and moreover lack of sprite to get there food tested by exporters
2.14 Statistical data:

Statistical data for exports from India to top 20 countries all over the world. This report covers past three years data in which it is clearly shown that USA is the top most country that imports dried and preserved vegetables from India. Statistical data is been collected from APEDA-Agricultural and Processed Food Products Export Development Authority, which is established by the government of India to promote the products which are related to agriculture sector.
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2.14.1 Exports from India (2009-2010):
Value in Lacs Quantity in MT
Sr No.
1 2 3 4 5 6 7 8 9 10 11 12 13
Country
USA France Russia Germany Spain Belgium UK Canada Australia Netherland Italy South Africa Brazil
Qty
4,49,945.00 3,07,672.00 2,23,986.00 85,048.00 2,21,185.00 1,03,223.00 67,555.00 59,334.00 78,758.00 64,158.00 47,285.00 25,760.00 19,748.00
Value
1,54,050.00 1,04,117.00 92,913.00 73,979.00 68,545.00 44,149.00 43,755.00 34,487.00 31,350.00 30,213.00 19,817.00 19,086.00 16,426.00
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14 15 16 17 18 19 20
Switzerland Poland Israel Nepal Philippines Estonia New Zealand
2,236.00 15,873.00 18,052.00 25,620.00 17,739.00 26,182.00 12,688.00
11,862.00 11,065.00 9,583.00 8,811.00 8,184.00 7,096.00 6,938.00
2.14.2 Exports from India (2008-2009):
Sr No.
1 2 3 4
Country
USA France Spain Belgium
Qty
4,61,184.00 4,12,109.00 2,47,884.00 1,98,085.00
Value
1,51,111.00 1,41,801.00 67,452.00 62,639.00
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5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Russia UK Germany Sri Lanka Dsr Canada Netherland Australia Italy Brazil Switzerland Finland Ukraine Poland Pakistan Ir Nepal New Zealand
2,28,580.00 73,607.00 52,595.00 1,89,737.00 82,670.00 48,507.00 57,363.00 34,114.00 13,951.00 456 10,697.00 28,454.00 11,986.00 65,693.00 46,700.00 6,767.00
60,763.00 55,264.00 41,126.00 33,937.00 27,107.00 15,798.00 15,757.00 12,363.00 9,811.00 9,621.00 8,075.00 7,367.00 6,513.00 6,273.00 5,902.00 5,666.00
2.14.3 Exports from India (2007-2008)
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Sr No.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Country
Germany U.S.A. Bangladesh France Spain Russia U.K. Belgium South Africa Netherland Canada Australia Switzerland Brazil Israel Sri Lanka Dsr Finland Poland Italy Philippines
Qty
2,95,797.00 2,45,474.00 4,06,050.00 2,15,080.00 1,79,041.00 1,41,875.00 57,989.00 1,12,074.00 20,832.00 42,851.00 52,508.00 63,456.00 1,414.00 17,407.00 16,305.00 46,051.00 8,273.00 10,204.00 16,164.00 14,830.00
Value
96,274.00 89,265.00 78,998.00 76,919.00 50,120.00 47,056.00 38,291.00 36,041.00 20,686.00 17,117.00 17,076.00 16,646.00 14,325.00 11,344.00 8,681.00 8,138.00 6,943.00 6,609.00 5,744.00 5,583.00
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Chapter 3
Statistical Data Analysis and Discussion of Results

Data analysis is done for export quantity (million tons) and value (lakhs) from 2000 2010 years. These values are taken from APEDA- Agricultural and Processed Food Products Export Development Authority.
Export quantity in million tons 10,22,766.00 10,39,317.00 14,32,242.00 11,96,253.00 12,37,849.00 22,74,377.00 20,27,601.00 21,37,346.00 25,13,638.00 21,18,428.00
Year 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010
Value in lakhs 4,12,996.00 3,44,807.00 4,35,921.00 3,79,803.00 3,86,527.00 6,74,887.00 7,26,823.00 7,30,898.00 8,43,905.00 9,04,525.00
3.1 Correlation analysis

3.1.1 Description:
The Pearson's correlation is used to find a correlation between at least two continuous variables. The value for a Pearson's can fall between 0.00 (no correlation) and 1.00 (perfect correlation). Other factors such as group size will determine if the correlation is significant. Generally, correlations above 0.80 are considered pretty high. Correlation coefficients significant at the 0.05 level are identified with a single asterisk, and those significant at the 0.01 level are identified with two asterisks. The correlations table displays Pearson correlation coefficients, significance values, and the number of cases with non-missing values (N). The values of the correlation
Page 28
coefficient range from -1 to 1. The sign of the correlation coefficient indicates the direction of the relationship (positive or negative). The absolute value of the correlation coefficient indicates the strength, with larger absolute values indicating stronger relationships. The correlation coefficients on the main diagonal are always 1, because each variable has a perfect positive linear relationship with itself.
Descriptive Statistics Mean Std. Deviation 1699981.70 567624.535 584109.20 213333.254
N 10 10
Export quantity Value in lakhs
Correlations Export quantity Export quantity Pearson Correlation Sig. (2-tailed) N Value in lakhs Pearson Correlation Sig. (2-tailed) N **. Correlation is significant at the 0.01 level (2-tailed). 1 Value in lakhs .933**
10 .933** .000 10
.000 10 1
10
3.1.2 INFERENCE
The correlation analysis between export quantity and value is 0.933,which is highly positive correlation. This is the main matrix of the Pearson's output. Variables have been arranged in a matrix such that where their columns/rows intersect there are numbers that tell about the statistical interaction between the variables. Three pieces of information are provided in each cell -- the Pearson correlation, the significance, and number of cases. When a variable interacts with itself, the correlation will obviously be 1.00. No significance is given in these cases
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3.2 Regression analysis

3.2.1 Description:
Linear regression analysis estimates the coefficients of a linear equation, involving one or more independent variables that best predict the value of the dependent variable.
3.2.2 Assumptions: For each value of the independent variable, the distribution of the dependent
variable must be normal. The variance of the distribution of the dependent variable should be constant for all values of the independent variable. The relationship between the dependent variable and each independent variable should be linear, and all observations should be independent. Variables Entered/Removedb Variables Variables Entered Removed Method Export . Enter a quantity
Model
d 1 i m e n s i o n 0 a. All requested variables entered. b. Dependent Variable: Value in lakhs
Model R .933a
d 1 i m e n s i o n 0 a. Predictors: (Constant), Export quantity School of Management Studies, JNTU
Model Summary Adjusted R R Square Square .870 .854
Std. Error of the Estimate 81635.414
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ANOVAb Model 1 Sum of Squares df 1 8 9 Mean Square 3.563E11 6.664E9 F 53.461 Sig. .000a
Regression 3.563E11 Residual 5.331E10 Total 4.096E11 a. Predictors: (Constant), Export quantity b. Dependent Variable: Value in lakhs
Coefficientsa Model Unstandardized Coefficients B Std. Error 1 (Constant) -11773.232 85487.770 Export quantity .351 .048 a. Dependent Variable: Value in lakhs Standardized Coefficients Beta .933
T -.138 7.312
Sig. .894 .000
3.2.3 INFERENCE:
The required regression line is Value (in lakhs) dried and processed vegetables = -11773.232 + 0.351(Export Quantity)
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Chapter 4
Conclusion and Suggestions

4.1 Conclusion:
India can become one of the largest vegetable exporters in the world and can equally be a large importer given its demographic diversity. This strong footing in agriculture provides a large and varied raw material base for food processing. Indias exports of Processed Food was Rs. 10065.58 Crores in 2008-09, which including the share of Dried and Preserved Vegetable (Rs. 496.42 Crores), Other Processed Fruit and Vegetable (Rs. 1371.79 Crores). The Indian food processing industry is primarily export oriented. Indias geographical situation gives it the unique advantage of connectivity to Europe, the Middle East, Japan, Singapore, Thailand, Malaysia and Korea. One such example indicating Indias location advantage is the value of trade in agriculture and processed food between India and Gulf region. There should be technology up gradation, quality management, firm adherence to export commitments and acquisition of appropriate negotiation skills. Many non-traditional vegetables mainly processed & gherkins and others like asparagus, celery, bell pepper, sweet corn, green and lime beans and organically grown vegetables are also being increasingly exported. Government and other private institutions can help Indian exporters and also farmers based on Pre-Investment and Pre-Feasibility Studies, Market Surveys and Studies, Preparation of TechnoEconomic Feasibility Reports, Identification and Selection of Plant and Machinery, Manufacturing Process and Equipment required, General Guidance, Technical and Commercial Counseling for setting up new industrial projects and also for growing quality based vegetables according to the exporters criteria.
4.2 Suggestions
4.2.1 TO GOVERNMENT
Infrastructure improvement in the areas of cold storage etc. Integration of various schemes no. of ministries have the same Schemes Running hence there is duplication of effort. Promote setting up of food testing laboratory. Real time update to exporter regarding changes in rules of importing countries.
Increase in allocation of money allotted MOFPI (ministry of food processing). Development of infrastructure like road, port etc. Improving Image of Indias food through strict quality check. Better representation in WTO for reduction in subsidy and SPS Removals.
4.2.2 TO EXPORTER
Integrating supply chain according to importing countries requirement. Adoption of international standards for production and processing of Food. Increasing production through application of advanced technologies in the processing of dairy products. Better and improved packaging. Improving cold storage and transportation capacity. Developing an efficient export marketing network to optimize the production and exports. Integrating supply chain according to importing countries. Setting up of more quality control laboratories for testing the quality of dairy products. Self Regulation should also be there on the part of exporter so that dont send food of bad quality. Brand Building effort should also be undertaken by exporters as there are no many Indians brand.
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References
Singh Chhotan and Vasisht A K (1995). Performance and prospects of export of agroprocessed products. Agric. Econ. Res. Rev.,8 (2): 18. Govt. of India, Annual Reports, Department of Food Processing Industry, Ministry of Agriculture, New Delhi, India Kejriwal N M (1992). Development of fruit and vegetable processing industries and their export potential. Ind. Fd. Packe,.46 (5): 13. Processed Foods exports from India Rajesh Mehta and J George, RIS Indian Food Processing Industry - Dun & Bradstreet Annual Report of Food Processing 2006-07 Ministry of Food Processing Industries, Government of India Policy environment of five food processing sectors in India Harsh Vivek
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Webliography
1. The Agricultural and Processed Food Products Export Development Authority (APEDA)
http://www.apeda.gov.in/apedawebsite/index.asp http://www.apeda.gov.in/apedawebsite/six_head_product/PFV_OPF.htm http://www.apeda.gov.in/apedawebsite/SubHead_Products/Dried_and_Preserved_Vegetabl es.htm 2. Agriexchange http://agriexchange.apeda.gov.in/indexp/Product_description_32head.aspx?gcode=0301 http://agriexchange.apeda.gov.in/product_profile/prd_profile.aspx?categorycode=0301 http://agriexchange.apeda.gov.in/product_profile/exp_f_india.aspx?categorycode=0301 3. Protein Foods & Nutrition Development Association of India (PFNDAI) http://www.pfndai.com/ 4. The Ministry of Food Processing Industries http://mofpi.nic.in/ContentPage.aspx?CategoryId=110 http://mofpi.nic.in/ContentPage.aspx?CategoryId=88 5. Gujarat Agro Industries Corporation Ltd.(GAIC) http://www.gujagro.org/
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Dried and Preserved Vegetables

Introduction and Research Methodology

1.1.1 What is Food Processing?