Mega Food Parks : How will it benefit the Indian Economy

By Deepak Parvatiyar

September 26, 2014

On 24th September this year, Prime Minister Narendra Modi inaugurated a mega food park in Tumkur, Karnataka and said such facilities would spur farmers’ economic empowerment.

“Better infrastructure and better facilities is the need of the hour,” Modi said and stressed on the need to sell Indian packed food in markets across the world.

What are Mega Food Parks?

Mega Food Parks scheme is considered to be an inclusive concept aimed at establishing “direct linkages from the farm to processing and on to the consumer markets”, through a vast network of collection centres and Primary Processing Centres. The purpose is to achieve a target of processing of perishables from the present six per cent to twenty per cent, and to increase the country’s share in global food trade to at least three per cent by 2015.

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These Mega Food Parks are expected to provide high quality food processing infrastructure near the farms. These included logistics, transportation, and central processing centres so as to ensure -

• Direct as well as indirect employment generation in rural areas
• Exposing farmers to a more systematic, market driven and profitable farming activities
• Generation of additional income for the farmers
• Reduction in post harvest losses
• Maintenance of value chain from the farm to the market

The history of Mega Food Parks in India

It was on 10th July 2012 when India’s first Mega Food Park — Srini Food Park, was inaugurated by the then union agriculture minister Sharad Pawar at Chittoor in Andhra Pradesh – the largest fruits and vegetables cluster in India.

On par with software parks, this new-age facility in a sprawling 147-acre space has been equipped with modular cold storage, advanced testing laboratories, state-of-the-art facility for pulping, bottling, tetra packing, and warehousing facilities. It offered supply chain infrastructure, cluster farming backed by field collection centre, self help groups and individual farmers. Today it has emerged as an ideal destination for food processing units.

Even the Mega Food Park at Tumkur that Modi inaugurated, is spread across 110 acres. With 22,000-tonne storage capacity and  30 food processing companies are expected to generate 4000 jobs besides benefiting farmers from the adjoining districts of Kolar, Shimoga and Tumkur, which are rich in vegetables, fruits, millets, and oilseeds.

The economics of Mega Food Park

The Indian food processing industry is at present growing at the rate of seven per cent and it is expected to grow from US$ 200 million in 2008 to US$ 310 million in 2015 with the highest growth being recorded in the Fruits and Vegetables sector (20 percent).

Another study by McKinsey & Company suggests that the Indian food market is poised to grow to $310 billion by 2015 and $ 344 billion in 2025.

Requirement to set up a Mega Food Park

The extent of land required largely depends upon the business, which may vary from region to region. Under the scheme, the government provides a grant of up to Rs 50 crore for each Food Park to be implemented by a consortium of companies. It is expected that each mega food park would have about 30-35 food processing units with collective investment of about Rs 250 crore that would eventually lead to an annual turnover of Rs 400-500 crore and generate employment (direct and indirect) for about thirty thousand people.

Obviously, Mega Food Parks, with their immense potential for expansion, can help India meet the food demands of future.

Mega Food Parks can check agricultural wastage

Despite an agrarian economy — agriculture contributes 18 per cent to the country’s Gross Domestic Product (GDP) — farming has remained in unorganised sector for decades resulting in poverty of the farmers (about 70 per cent of Indian population is engaged in farming) in the absence of infrastructural support such as rural connectivity, storage and warehousing facilities to reduce high percentage of agricultural wastage.

India is the most richly endowed agricultural nation in Asia. With one-tenth of world’s arable land (160.5 million ha) and one fifth of world’s irrigated land (59 million ha), it is world’s second largest food producer.

How can Mega Food Parks provide a fillip to the farm sector?

It may be mentioned that the total food production in the country is likely to be double in next decade or so.  Yet at present the country accounts for less than 1.5 per cent of international food trade and lack of processing facilities mean that there is wastage of about thirty five per cent of the agricultural produce worth about US $ 10 billion.
It is in this backdrop that food parks have become a necessity to provide the crucial link between the farmers and traders. Studies have shown that the food processing industry has an untapped domestic market of one billion consumers in the country, and hence has been accorded the status of priority sector in the new trade policy of the government.

It was in September 2008 when the then Cabinet Committee on Economic Affairs approved the Food Park scheme. Its aim was to encourage public-private partnership in creating rural infrastructure in food processing sector and the scheme was taken up under the 10th five-year plan. However it was revised and renamed as Mega Food Park scheme for the 11th Five Year Plan Period so as to meet the requirement of the Vision 2015 of the Ministry of Food Processing Industries.

Already the government has thus far sanctioned 42 Mega Food Park projects throughout the country. And 25 of them are being implemented in various states. For the remaining 17, which are expected to attract investments to the tune of Rs. 2,100 crore, the government has received seventy two expressions of interest.