Saturday, August 7, 2010

Food Processing: The Sunrise sector in Bihar

Bihar is a land of immense opportunities for food processing owing to its agricultural potential, enabling policy environment and new schemes launched by Govt. of Bihar. Bihar produces 50 lakhs MT Paddy in an area of 40 lakhs ha and 20 lakhs MT of Maize in an area of 7 lakhs ha. It is third largest producer of vegetables (approx. 130 lakhs MT), seventh largest producer of fruits (approx 30 lakhs MT) and has unique products like litchi, Makhana, Banana and Mangoes.

The opportunities for rice based industries in Bihar, including modern rice milling and husk-based power plants is quite large. Bihar is the largest market for milled rice and the current milling capacity in the state is not enough to meet the demand. There is a thriving milling industry in Rohtas, Buxar, Kaimur, Aurangabad and Bhojpur areas. Bihar also provides enough scope for Maize based industries in terms of starch, poultry feed, corn oil, flakes and flour units. Khagaria, Madhepura, Katihar, Purnea, Saharsa and Begusarai are the main maize producing districts in the state. Winter/ Rabi maize is unique to the state and its production is increasing day by day, due to low risks involved and easy market with assured remunerative price. The state is a major supplier to the maize based industries located in northern and eastern India.

On the Horticulture fronts too, it is holding a legion de honour position. Bihar produces 75% of the litchi in the country with production area well connected by road and rail. There is about 10 lakhs MT production of banana in Vaishali and Bhagalpur region, 20,000 MT of Makhana is produced in Darbhanga, Madhubani, Purnea, Katihar and other lying areas of state, apart from other unique products.

Bihar government has decided to develop two integrated food zones and food parks and would setup 100 Rural Agribusiness centres, develop Rice, Makhana & Maize cluster, develops fish, poultry and meat sector and at the same time would set up a nodal Quality Assurance and Product Development Centre.

It is more than the scores of incumbent state governmental enabling policies, undertaken to create investment friendly environment in Bihar. There are many stories of applause for the Nitish Govt., few among them are; Industrial Incentive Policy 2006, abolishment of APMC Act and Bihar Single Window clearance Act 2006. The efforts needs well appreciation for the steps taken for the development of food processing in Bihar.

Private sector must invest and participate pro-actively in Bihar’s food-processing industry to take it longer and at sustainable levels. The private sector must take advantage of the business-friendly climate offered by the Bihar government and invest in the state, especially in the food processing industry. In this connection, Industry associations like Confederation of Indian Industry (CII) and FICCI joined the cause with the organization of roadshows in Mumbai and Bangalore to encourage private sector investment in the state. Bihar offers immense potential for investment and there is a need for industry to participate wholeheartedly in the economic development of the state. The entrepreneurs at the same time need to look at new and better business opportunities, adding that the state has the most fertile soil in the country and ample water resources to encourage agricultural growth. With pro-active government intervention, Bihar has witnessed an improvement in infrastructure facilities, assuring sustained growth in the state for private investors in various fields and particularly in food processing.

Identifying the need for food safety and quality, the Ministry of Food Processing Industry, GOI, has earmarked Rs 250 crore towards the sector under the 11th Five-Year Plan. Food Processing and Agri Business that the country is short by 10 million tonnes of cold storage capacity due to which about 30- 40% of agricultural produce goes waste every year., against a requirement of over 31 million tonnes of cold storage, India has a capacity of nearly 21.7 million tonnes, leading to a loss of about 40% of the agri-produce post harvest. Cold storage facilities now available are mostly for single commodity like potato, orange, apple, grapes, pomegranate and flowers, resulting in poor capacity utilisation.

The availability of easy credit was the biggest road block to the development of the industry. While income from the agriculture sector had grown from Rs 9,000 crore to Rs 40,000 crore in the past few years, the effective level of credit has been stagnant. The proper management of land, irrigation, seeds, pesticides, fertilizers, storage and credit are the seven areas which should be worked upon to bring about a change in the agriculture sector and you guys are the ones who can do it.

Three major points of potential, policy and environment, makes Bihar an attractive investment destination. Despite the fact that Bihar is a fertile state complete with skilled and cheap labour, what is most important in today’s date is the right pricing of the agricultural produce for which food-processing industry needs to play an active role.

There is ample scope for a fruitful partnership between private investors and the Bihar Govt, which can ensure better returns. The Government has formulated a liberal industrial policy for the potential investors in the food processing industry; the policy kitty has been made further more attractive taking the state forward in the league compared to other regions. Under this liberal industrial policy of Bihar, any potential investor in the food processing industry can avail the facilities already in place under the Bihar Industrial Policy, 2006, like 80% VAT reimbursement, 50% capital subsidy in the sphere of captive power generation, etc, coupled with added advantages like 40% capital subsidy and an absolute no bar or objection on behalf of the state government on any subsidy or facility what the investor wants to avail from the central government.

The Planning Commission has however, laid down a growth target of at least 4% for this sector in the 11th Five Year Plan as against the achieved growth rate of 2% in the 10th Plan. And within India, Bihar is such a state that has got a fertile land capable of multi-cropping and a set of skilled and cheap labour, where agriculture and agro-based industries can thrive to their capacity. It is fast coming up as the most sought after destination for the food processing industry in the eastern part of the nation.

Agri-business for rural India can do what Information Technology has done for urban India. The state should be promoted as the food factory of the world in terms of both production and marketing. The biggest factor in Bihar’s favour in the food market is that of a low-cost advantage and the most suitable agro-geographic conditions. Therefore, Agri-business could become the safest bet for Bihar, and can thus pave the sure way to progress in the food processing industry.

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