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3/5/2014 Mrunal [Food Processing] Supply Chain Management, Upstream Downstream requirements for Fruit & Vegetables, Confectionery industries » Mrunal
http://mrunal.org/2013/08/food-processing-supply-chain-management-upstream-downstream-requirements-for-fruit-vegetables-confectionery-industries.ht… 1/19
[Food Processing] Supply Chain Management, Upstream Downstreamrequirements for Fruit & Vegetables, Confectionery industries
1. Prologue
2. What is supply chain management?
1. What is upstream-downstream?
2. What is Forward-Backward Integration?
3. Vertical integration
3. Food Industry: Supply Chain
1. FHEL’s Apple Business: Optimized Supply Chain
1. FHEL’s Apple Upstream
2. FHEL’s Apple Downstream
4. Fruit Veggies Processing (F&V)
1. Fruit-Veggies SCM: Upstream Requirements
1. #1: Need New Varieties
2. #2: Need more Cold Storages
3. #3: Transport
1. Horticulture trains
2. Kisan Vision Project
2. Fruit and Veggies SCM: Downstream Issues
1. Export Transport
2. Export: Regulatory issues
5. Chocolate /Confectionery Business
1. ChocoSCM@Upstream
1. #Sugar
2. #Cocoa
2. ChocoSCM@Downstream
6. Misc. useless Tables
1. Leading States: Fruits
2. Leading States: Vegetables
3. Big Companies: Fruit/Veggies Processing
4. Big Companies: Chocolate business
Prologue
In the previous articles we saw
1. Food processing industry: Awesomeness and Obstacles
2. Food processing industry: Truckload of Government Schemes and bodies
3. Marketing of agricultural produce: issues and constrains, Nuisance of APMC Acts and
Commission Agents
4. Agro/Food Processing: Export, Dumping, FDI, Finance, Taxation, Budget Provisions,
3/5/2014 Mrunal [Food Processing] Supply Chain Management, Upstream Downstream requirements for Fruit & Vegetables, Confectionery industries » Mrunal
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CODEX, NWR, BRGF, RKVY
Moving on, in this article we see topics
UPSC General studies Mains Paper 3 Syllabus TopicTopics touched inthis article
Food processing upstream and downstream requirements,supply chain management.
Fruit-VegetableConfectionary
1. Infrastructure: Energy, Ports, Roads, Airports,Railways etc.
2. transport of agricultural produce and issues andrelated constraints;
Horticulture trains
What is supply chain management?
Supply chain is a system that links a company with its suppliers andcustomers.Supply chain management (SCM) tries to optimize ^this system by…
1. getting the right things2. to right place3. at right time4. In a cost-effective manner.
What is upstream-downstream?
In any business, you get input (men/material)==>process it==>output(goods/service).In Supply chain, Upstream-downstream depends on the point of reference.For example,
Point ofreference
Upstream Downstream
farmerTraders of seeds, fertilizer, pesticidesand agro-machinery.
1. middlemen @Mandi2. Food company (if he
has contract farmingagreement)
3. households (if he isdirectly selling tofinal customers)
1. Farmers,1. distributors
3/5/2014 Mrunal [Food Processing] Supply Chain Management, Upstream Downstream requirements for Fruit & Vegetables, Confectionery industries » Mrunal
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foodprocessingcompany
2. Mandi-agents3. Suppliers of food-preservatives,
edible-colors, plastic-aluminumpackaging etc.
2. wholesalers3. retailers4. final-customers
Kirana shop Wholesaler Aam-admi
Flipkart.com
Book publishersMobile/electronics/computercompaniesSuppliers of packaging boxes,bubblewrap plastic etc.
Online buyers
In short,
Upstream downstream
towards suppliers to your company (+intermediaries if any)
towards consumers(+intermediaries if any)
What is Forward-Backward Integration?
Integration Backward Forward
WhatCompany expands itsactivities toupstream areas
Company expands its activities todownstream areas
Why?
Company aims to getraw material @cheaprates, uniformquality, steady supplyand eliminate anymiddlemen.
Company aims to get more control over sales,consumer-contact and eliminate anymiddlemen/kiranawalla/wholesellers/retailers.
1. Amul sets updairy farmers’cooperative invillages tocollect milk.
2. In the late 60s,DhirubhaistartedReliance fortextilemanufacture.But sincepolyester ismade frompetrochemicals,so he entered in
3/5/2014 Mrunal [Food Processing] Supply Chain Management, Upstream Downstream requirements for Fruit & Vegetables, Confectionery industries » Mrunal
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Examples
Petrochemicalbusiness. Butpetrochemicalis derived fromPetroleumrefining, so hemoved intoPetroleumrefining as well.
3. AndrewCarnegie’smain businesswas Steel. Laterhe boughtcoalmines,iron-ore mines,even the shipsand railwaysthat transportedraw material tohis steelfactories.
4. Starbucks(chain ofcoffee bars)buys coffeeplantations inCentralAmerica.
5. When a Carcompanyacquires a tirecompany, heavyengineeringcompanyacquires a steelplant etc.
1. Amul has its own pizza outlets and icecream parlors.
2. Raymond opened an outlet in Karachithis year.
3. Nike, Adidas, Apple have their ownretail outlets in big cities.
4. Flipkart has its own courier “Ekartlogistics” so they don’t have to rely onBluedart, DHL and other couriercompanies to deliver packages.
5. And of course, if some Desi-liquormafia opens dance-bars and gamblingdens, that is also an example of Forwardintegration.
Vertical integration
When company’s backward and forward integration is so good that itpractically runs everything from making raw material to selling final productto final customer. Example Oil giants such as Shell/BP have their own oilwells (supply), refineries (processing) and petrol pump (retail).In other words, Vertical integration is achieved when Single firm absorbsseveral firms involved in all aspects of a product’s manufacture from rawmaterials to distribution.For Indian food processing industry, Vertical integration is extremely
3/5/2014 Mrunal [Food Processing] Supply Chain Management, Upstream Downstream requirements for Fruit & Vegetables, Confectionery industries » Mrunal
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difficult because like we saw earlier:Indian food entrepreneurs are small sized and loan starved, whileVertical integration requires deep pockets and truckload of cash.FDI permitted only in a few specific sectors of Agriculture. Many stateshave outdated APMC laws. = backward integration is difficult.FDI in Multibrand retail is permitted but with many conditions.=Forward integration also difficult.
So, what we can have is “linkage”. For example
Setup promotes ____ linkage from ____’s point of view
Mega Food parksBackward food industry’s
Rythu Bazar forward farmers’
Food Industry: Supply Chain
Indian Food processing supply chain has two type of Stakeholders
stakeholder Who?
those included in SupplyChain
1. Creators: Farmers, Food Entrepreneurs2. Contributors: Middlemen, Retailers,
Commodity Exchange3. Consumers: Domestic And Foreign
those influencing supplychain
4. Government: Laws, Taxation, Incentives5. Infrastructure: Transport, Storage, Power
Based on level of processing, we can classify food products into:
ProcessedProducts
What?
PrimaryProducts consumed in the original state. Don’t have any no valueaddition. (e.g. just chop apple from the tree, pack it in wooden-boxesand send to market)
SecondaryBasic level of processing: grading, sorting, cleaning, cutting, drying,grinding etc. before they are consumed. (e.g. dried fish, turmericpowder, chili powder, wheat flour.)
TertiaryCombining multiple primary, secondary products from above anddoing high value addition (e.g. ice creams, biscuit, jam, cakes,pastries etc.)
As you can imagine: tertiary food products ought to have a longer supply chainthan primary products because tertiary food products need variety of inputs.But in India, even primary processed food too has a lengthy supply chainthanks to dozens of intermediaries before farm produce reaches the fork.
3/5/2014 Mrunal [Food Processing] Supply Chain Management, Upstream Downstream requirements for Fruit & Vegetables, Confectionery industries » Mrunal
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Observe the following diagram:
click to enlarge
As you can see this supply chain is lengthy and fragmented= high cost and wastage.An ideal fruit supply chain should be similar to FHEL’s.
FHEL’s Apple Business: Optimized Supply Chain
Container Corporation of India (CONCUR)= a PSU under Railways ministry.Fresh and health Enterprises ltd (FHEL) = subsidiary company underCONCUR, started in 2006to create world class cold chain infrastructure in the country
FHEL’s Apple Upstream
RawMaterial
FHEL directly procures Apples from Shimla & Kinnaurdistricts of Himachal Pradesh and transports them to Sonepatfor sorting, grading, packing & storage.Company has its own trucks, as a result apples reach to fromHP to Sonepat within a day.
UniformQuality
FHEL sends Agro-scientists to the Apple farmers on its owncost.These scientists interact with the farmers, help improvingapple quality and productivity, post-harvest management.FHEL also arranges all inputs required by the farmers like
3/5/2014 Mrunal [Food Processing] Supply Chain Management, Upstream Downstream requirements for Fruit & Vegetables, Confectionery industries » Mrunal
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nutrient packages, pesticides/ fungicides, packing materials,farm implements, etc.
MiddlemenFHEL was among the first companies to procure apples directlyfrom the farmers and has now refined the procurement system. Thishas eliminated middlemen in the chain.
Price
FHEL works in an open and transparent manner (unlikeUPSC), therefore, when FHEL procures apples, all thefarmers in Himachal Pradesh know the rates offered by it.This acts as a benchmark and all the farmers are able tobargain well with other apple traders.
StorageThe company has state-of-the-art storage technology toensure that the apples last upto 8 months in the storage +sorting, grading, packaging facilities.
FHEL’s Apple Downstream
FHEL sells its apples
1. via Marketing Associates in Delhi, Mumbai, Chennai, Ahmedabad and otherbig cities
2. Via Cash and Carry wholesale or Retail Chains such as Bharti Wal-Mart, BigBazaar, Aditya Birla retail, etc.
With the above upstream and downstream arrangements, FHEL has shortened andoptimized its supply chain and as a result
1. less spoilage / wastage of apples2. More profits to both company and farmers, since middlemen are eliminated.3. Apple available at cheaper price to consumers
Ok well and good for FHEL’s apples but most of the Indian food processingindustries don’t have such supply chains. From the last three articles on [FoodProcessing], we can derive a few common points
What are the upstream requirements for efficient supply chain management?(From Food entrepreneur’s point of view)
Upstream requirement solution
1. Need backwardlinkage with farmer:via contract farming
2. Need to eliminatemiddle-men.
1. Amend State APMC laws.
3/5/2014 Mrunal [Food Processing] Supply Chain Management, Upstream Downstream requirements for Fruit & Vegetables, Confectionery industries » Mrunal
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3. need uniform highquality raw material
2. R&D and exertion services in agro3. introduce new fruit/veggie hybrid varieties4. farm mechanization5. land reforms6. farmers should easily get loans7. FDI only permitted in a few specific agro-
sectors. Relax this policy.
4. Need steady supply ofinputs @reasonableprices
8. cold storage infrastructure for seasonal rawmaterial e.g.potatoes
9. Reduce indirect taxes on agro-produce,packaging material, preservatives, food colorsand other chemicals.
5. quick transport 10. railroad connectivity
Next, What are the Downstream requirements for efficient supply chainmanagement? (From Food entrepreneur’s point of view)
Downstream-Requirement solution
Organized retail stores, forefficient distribution ofproducts
FDI in Multibrand retail
Reaching the costumers inforeign countries
compliance with CODEX, HACCCPstandardsR&D, product development,packaging keeping those foreignersin mindPromotion of Indian products abroadless taxes on air-cargomore efficient cargo handling atportsbetter railroad connectivity withports
Fruit Veggies Processing (F&V)
In the first article we had seen the scope-significance of entire food processingindustry. Now let’s get more additional points specific to Fruit-veggies industry:
Top 5 States
VEGGIES FRUITS
3/5/2014 Mrunal [Food Processing] Supply Chain Management, Upstream Downstream requirements for Fruit & Vegetables, Confectionery industries » Mrunal
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UPWBBiharOdishaTN
AndhraMHGujTNKarnataka
Big list of individual fruit/veggie grower states= given at bottom under the title“Misc.”
Export potential
Processed Food demand and export potential in
Mango PulpSaudi Arabia, Kuwait, UAE, Netherlands andHong Kong
Pickles, ChutneySaudi Arabia and UAE, USA, UK andGermany
Tomato Paste, Jams, JelliesAnd Juices
USA, Russia, UK, UAE and Netherlands.
Fruit Juice demand
More youth + Higher disposable incomes + ‘heath’ consciousness=> Urbanjunta preferring fruit juices over carbonated drinks (e.g. Thumbs up, Coke)In 2012, Fruit Juice segment was more than 50 billion rupees.This shift is creating newer opportunities:
Exotic flavors: cranberry, lychee and pomegranate,Vitamin, nutrient or fiber-enriched fruit juices.
Big players have responded to this trend by focusing on their non-carbonatedsoft drinks (+More ads using Bollywood celebrities like SRK, Kat, Bips)
Fruit juice product Boss
Slice, Tropicana Pepsico
Real Dabur
Maaza Coca Cola
Frooti Parle Ago
Fruit-Veggies SCM: Upstream Requirements
#1: Need New Varieties
Almost 1500 mango varieties are grown in India but only 3-4 of them are worthy ofexport but they too face problems:
AlphonsoMango
Famous and highly valued. But due to its thin skin, it can only remainfresh for 20 days (even in cold storage) = low shelf life.
Totapuri Cheaper than Alphonso mangoes and have higher pulp content. ButTotapuri mangoes banned in some foreign countries due to ‘stone
3/5/2014 Mrunal [Food Processing] Supply Chain Management, Upstream Downstream requirements for Fruit & Vegetables, Confectionery industries » Mrunal
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mangoes weevil’ pest
Similar problem for other fruits/veggies:
Rawmaterial
quality problem
PotatoMost Indian potato varieties = don’t have uniform size andlength=> can’t make good chips/French fries.
OrangeVery old variety grown in India= high bitterness level and pipcontent.Pepsi and Dabur import orange juice concentrate for their juices
Apple
India grows “red delicious” variety = very cheap and hencepreferred by Desi costumersBut this apple varieties has cardboard-like texture and peculiartaste that foreigners hate. Hence US/EU consumers prefer NewZealand / Australian Apples over Indian.
Nuisance of Middlemen
For most fruits, the cultivation/gestation period at least 3-4 years. But banksdon’t easily give loans to farmer for such long period.Hence difficult to encourage farmers to experiment with new varieties offruits/veggies, even if the new variety has more profit/export potential.Given this lack of timely financing from banks / financial institutions, thefruit-farmer goes to middlemen, who advance money to the take the farm onlease.Then middlemen manipulates selling prices, to enhance their margins. e.g.Indian Mangoes=wide price fluctuations in Middle-east.South American countries offer more consistent prices and are a threat toIndia. India’s dominance in the pulp sector is gradually eroding due to thisfactor
What is the solution/requirement?
1. Research-development (R&D) to make new varieties of fruits n veggies withlonger shelf life, disease resistance and export quality-uniform size-length-color-texture.
2. Government should promote cultivation specific fruits and vegetables in aspecific states. It would lead to ease in monitoring of new verities + uniformquality=> easier to process + export worthy. For example
RawMaterial
What to do? Where to focus?
3/5/2014 Mrunal [Food Processing] Supply Chain Management, Upstream Downstream requirements for Fruit & Vegetables, Confectionery industries » Mrunal
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Orange Develop varieties with low-bitterness, suitable forjuice-processing
Maharashtra,Andhra Pradesh
PotatoDevelop varieties suitable for processing intoFrench fries, Chips (low sugar content, uniformlength)
UP , West Bengal,Gujarat
AppleEncourage cultivation of foreign Varieties fromNZ, S.Africa etc.
Jammu &Kashmir,Himachal Pradesh
MangoIdentify other varieties for processing, and reducedependence on Totapuri, Alphonso
UP , AP , TN,Maharashtra
SapotaFocus on cultivation of uniform size, firm fruitswith longer shelf-life
Karnataka,Maharashtra,
LitchiCultivate varieties with higher shelf life, andsmaller seed size
Bihar, WestBengal
OnionsCultivate sweet and white onions- they have exportdemand
Maharahstra
Partnership/Collaboration
As we saw above, Indian orange=bitterness=not good for juice making. Pepsiimports FCOJ (Frozen Concentrate of Orange Juice) as raw material for itsTropicana juice brandRecently Pepsi and Government of Punjab have partnered to promotecultivation of new orange variety in Punjab, to reduce dependence on theimported FCOJ.More such partnerships are necessary in the Fruit-veggie sector R&D.
#2: Need more Cold Storages
Why is Cold storage important?
1. Reduces losses due to spoilage2. Reduces gluts and distress sale by growers,3. Reduces transport bottlenecks at the peak period of production,4. Maintains quality of the produce5. Ensures that a crop harvested over a period of one or two months is capable of
serving the round the year market demand.
#investment in cold storage
Broadly, fruits & vegetables can be classified into three segments, based on theirshelf-life in cold storage
Shelf lifeinColdStorage
Example Does it attract investment?
A Long (6-8Potato, Apple, Chilies
Most investment comes here.Especially for potato- for hoarding
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moths) during lean season.
BModerate(8-10 weeks)
Grapes, Pomegranates,Banana, Tomatoes
not much investment coming here,Except few export oriented chains.
Csmall (fewdays)
Papaya, Melons, Gourds,Cabbage, Cauliflower,Leafy Vegetables.
hardly
Needless to say, for category B and C, government needs to provide innovative tax-reliefs/incentives to attract more investment.
NonHorti
There has been a relative neglect of the non-horticulture cold chainsespecially those relating to meat, poultry and fishing.State Governments need to actively work on these cold chains viatheir Animal Husbandry & Fisheries Departments.
Newtech
In cold storages, following technologies need to be adopted
1. Use of Global positioning system (GPS),2. better electronic weighing systems,3. local language billing machines4. General Packet Radio Services (GPRS) for updating the details on
the central server for storage and movement of produce in and out ofcold storages
#Electricity
Desi cold storages have high operation cost than their foreign counterparts,mainly because of high consumption of electricity.Reason: Food entrepreneur doesn’t buy efficient (and expensive) equipmenton Engineer’s advice. Instead, they buy cheap quality equipment on CA’sadvice. Why? Because we saw earlier, government schemes have ‘low-ceilings’ + if project cost increases too much food-entrepreneur won’t getloans under Priority sector lending of Bank and won’t be eligible for varioustax benefits available to MSME industry.
#3: Transport
Government: enhance road-connectivity to rural areas.Entrepreneur: needs to get easy loans for reefer vans and refrigerated trucks.Railways: Introduce dedicated horticulture trains. More frequency of freighttrains in agro-regions.
Horticulture trains
Who?1. National Horticulture Board (NHB)2. Container Corporation Limited (Concor), under Rail Ministry
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Why?
Because conventional goods trains have following problems
1. have no ventilation => fruit/veggie gets rotten2. Since there is no ventilation, they keep the doors open =>theft
during transport.3. slow speed
When?
2009: idea mooted under Kisan Vision Project of Indian Railwaysin 2009.2012: Horti train between Maharashtra and Delhi, with banana andpotato as core cargo.
12th FYP: 100 crores to be spent on this project
Benefits/Features of Horticulture trains:
1. Specially designed containers with good ventilation=>increases the shelf lifeof the produce
2. Container train has been designed to run at a top speed of 100 kilometre perhour (kmph) as against the maximum speed of 75 kmph of conventionalrailway wagons and trucks= faster delivery less rotting.
3. Accepts small quantities, to the unit of one container without agents ormiddleman. Even small farmers who wish to transport goods to variousdestinations now have the chance to do so without coughing up huge sums tomiddle-men or clearing agents.
Let’s see an example, “Banana Train”= connects Maharahstra to Delhi. Lauched inSept.2012
corecargo
direction
BananaJalgaon (MH) to the rail yard of the Azadpur mandi in Delhi.by the way,Azadpur Mandi @Delhi= Asia’s biggest market for fruits and vegetables.
Potatos in the return journey (i.e. from Delhi to MH).
If train returns empty with no cargo=uneconomic. In Delhi-Maharashtra route, weconnected them with Banana and potatoes. Similarly following projects should beconsidered:
1. Delhi to W.Bengal (Apples) and return WB to Delhi (potatoes)2. JK to Delhi (Apples) and return Delhi to JK (potatoes: originally from WB)
Kisan Vision Project
Who? Railway Ministry
When? Mamta’s rail budget 2009*
Why?To encourage creation of facilities of setting up cold storage andtemperature controlled perishable cargo centres through Public Private
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Partnership (PPP)
How?
PPP via public sector logistics viz.
1. Container Corporation of India Ltd. (CONCOR)2. Central Warehousing Corporation (CWC)3. Central Railside Warehouse Company Ltd. (CRWC)
*Although topic is from 2009 but been in news in August 2013 for:
1. Rail Minister’s reply in Parliament (available @pib.nic.in)2. News reports on how it is #epicfail
And for us, it becomes important for GS Paper 3 because UPSC syllabus contains
1. Infrastructure: Energy, Ports, Roads, Airports, Railways etc.2. transport of agricultural produce and issues and related constraints;
Anyways, under this Kisan Vision project, 6 Perishable Cargo centers were to bedeveloped at:
1. Nasik (Maharashtra)2. New Azadpur (Delhi)3. New Jalpaiguri (West Bengal)4. Singur (West Bengal)5. Dankuni (West Bengal)6. Murshidabad (West Bengal)
A Pilot project was started @Singur, WB in 2009 itself but yet to take off because
Although facility has the capacity to store more than 1,000 tonnes ofpotatoes, but lack of proper roads for trucks to enter the area. Recall thecriticism of government schemes from earlier article…. Most schemes seek toget investors to pump money in (Cold storage) infrastructure withoutproviding the necessary (road) support for the utilization of the infrastructure.Cold storage projects have to be near the market, especially the multi-purposeones. This project was located far away from the market and could not findmany takers.
Fruit and Veggies SCM: Downstream Issues
Export Transport
It takes about 3 weeks to send Mango from India to EU via sea=> seatransport is unsuitable for Alphonso Mango export. You’ve to transport it viaairIndian air-cargo-transport=> fuel surcharge and variety of taxes. Combine thatwith exchange rate difference =Pakistani mangos are cheaper in EUcompared to Indian mangos.Similarly Terminal handling charges at several ports are also high (compared
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to Hong Kong etc).poor frequency of ships / flights leaving from various ports / airportsneed customs clearance=>inefficiency, delays, bribes
All ^these results into
1. wastage of perishable food/veggies2. Higher cost of transport => product price increased in destination country =
pricewise, it becomes uncompetitive.
Export: Regulatory issues
Japan Indian mangoes without Vapour heat treatment (VHT)=banned.
Australia Indian mangoes import facing problem due to fruit fly
USA Indian mangoes import facing problem due to Stone weevil.
EU and in the Middle East follow CODEX standards when importing fruitbased products.India’s problem: Lack of post-harvest treatment facilities such as for vaportreatment – Lack of packhouses from farm to port.Even after complying with these requirements, Indian exporters need to inviteand sponsor visits of the quarantine departments of the relevant importingcountry for lifting of the ban. Such visit / inspection costs about ~ USD100,000/visit/personSimilarly for grape exporters: the cost of EurepGap certificate Rs.75000 /farmer.APEDA (under Commerce Ministry) provides financial help for Eurepgapcertification, more fruits and veggies need to be given similar help to meetwith the certification/ requirements in foreign markets.
Retail
As we saw in the first article, The Kirana-wallas in USA (known as mom and popsstores) have cold storage / refrigeration hence they can sell fresh fruits/veggies butour cart-pullers, small-veggies sellers don’t have such facilities=wastage. HenceFDI multi-brand=necessary for the growth of fruit-veggie industry and to containfood inflation.
let’s move to next sector:
Chocolate /Confectionery Business
Scope/significance:
The per capita chocolate consumption in India is much lower than most Europeancountries. But there is lot of potential in upcoming years, because:
1. Increased disposable incomes, newly rising middleclass = higher propensityto spend on impulse categories such as chocolate.
2. Chocolates-sale no longer confined to children only. Companies trying the
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power of advertisement to attract:Youth= Those ads involving romance/valentine day angle.Middle-aged= Chocolate gift boxes for Diwali and Raksha-bandhan etc.This advertisement model has been successful in China, chocolate boxgift has become a routine-gift for wedding receptions.
Year Chocolate business in billion Rs.
2012 60
2017 (Projected) 140
(^doesn’t include the income of Dentists.)
ChocoSCM@Upstream
#Sugar
(same can be used for soft-drink industry)woolly aphid (an insect pest) causing high damage to sugar crops inMaharashtra and KarnatakaUP’s yields are much lower than TamilNadu.successive increase in sugarcane prices in past years, mainly politicallydriven= abnormally high cost of production of sugarThis Increase in raw material (sugar) prices has hurt profit margins ofconfectionary units because companies are unable to pass on the higher coststo consumers.^To put this in other words- the dairy owners can form a cartel and raise milkprices every month, but you’ll still purchase it, because milk is an essentialitem.But If toffee makers form a cartel and raise price of 1 toffee from one rupeeto two rupees, then most people will stop buying or giving additional pocketmoney to their kids! Meaning toffee-maker cannot ‘pass’ the increased rawmaterial cost to the final consumers.Hence Desi confectionary industry wants rationalization of the sugarcanepricing policy. For more read Ranagarajan Sugar committee article click me.
#Cocoa
Kerala is the leading cocoa producing state in the country but industrialdemand is significantly higher, estimated at nearly three times the cocoacultivation.But cocoa cultivation= Inadequate marketing network + fluctuations in prices=farmers feel insecure.Indian varieties of cocoa=low chocolate yield.Need R&D, Need to introduce superior varieties using clonal technology toimprove yields.Cocoa buying attracts >10% purchase tax in Kerala= input cost increased forconfectionary unit.
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BaseGum
We’ve to import most of the basegum (for chewing gum) fromEurope and South East Asia=>manufacturing cost increased.Need to promote R&D and production for base gum within India.
@Processing
Innovation
To create new demand and to attract health conscious adultconsumers, industry needs to develop sugar-free, fruit basedgum, vitamin-enriched products, breath strips etc. like theAmericans are doing to attract the diabetes patients.
Packaging
In developed markets, consumers buy chocolate/toffees inlarge pack.But Indian consumer=price conscious, hence toffees usuallysold in single unit (e.g. 1 éclairs for 1 rupee)smaller/Individual package=need more plastic=Operation costincreased
ChocoSCM@Downstream
TaxationUnorganized/non-branded toffee makers= evade taxes.This puts organized confectionery (branded players) at adisadvantage, especially in rural areas.
Reachlocal kirana stores and large retailers, paan and cigarette outletsare covered extensivelyBut cost of distribution is high particularly to rural outlets
freebies
In Toffee business you’ve to lure kids by offering free tattoos,stickers, toys etc.In the aspect, Indian toffee makers are far behind theirAmerican/European counterparts.
ExportPotential
Currently, African countries= dominated by Brazilianconfectionary import. Much potential for Indian toffee makers.In China, the recent trend of gifting chocolate at weddingbanquets has led rise demand for premium-chocolate gift packs,we can make an entry Chinese market too.Indian confectionery products don’t find demand in US/EU dueto lack of innovative products/flavors compared to their localproducers. But The Indian industry can engage in contractproduction for foreign brands, given the lower manufacturingcosts in India. (chocolate “outsourcing”)
3/5/2014 Mrunal [Food Processing] Supply Chain Management, Upstream Downstream requirements for Fruit & Vegetables, Confectionery industries » Mrunal
http://mrunal.org/2013/08/food-processing-supply-chain-management-upstream-downstream-requirements-for-fruit-vegetables-confectionery-industries.… 18/19
Misc.Useless tables
Just some stupid Tables for informative purpose only, otherwise hardly relevantfrom exam point of view.
Leading States: Fruits
Fruit leading producer
Banana Maharashtra, Tamil Nadu, Karnataka
Mango Andhra Pradesh, Uttar Pradesh, Bihar
Citrus Maharashtra, Andhra Pradesh, Karnataka
Papaya Andhra Pradesh, Karnataka, West Bengal
Guava Bihar, Maharashtra, Karnataka
Grapes Maharashtra, Karnataka, Tamil Nadu
Pineapple West Bengal, Assam, Bihar
Apple Jammu and Kashmir, Himachal Pradesh, Uttaranchal
Litchi Bihar, West Bengal, Assam
Sapota Karnataka, Maharashtra, Tamil Nadu, Andhra Pradesh
Total fruits (inclothers)
Maharashtra, Andhra Pradesh, Tamil Nadu,Karnataka
Leading States: Vegetables
Potato Uttar Pradesh, West Bengal, Bihar Punjab
Brinjal West Bengal, Orissa, Bihar
Tomato Maharashtra, Karnataka, Bihar, Andhra Pradesh
Tapioca Tamil Nadu, Kerala, Andhra Pradesh
Cabbage West Bengal, Orissa, Bihar
Onion Maharashtra, Karnataka, Gujarat
Cauliflower West Bengal, Bihar, Orissa
Okra Bihar, Orissa, West Bengal,
Peas Uttar Pradesh, Jharkhand, West Bengal
Sweet Potato Orissa, Uttar Pradesh , West Bengal
Total veg. (incl others) West Bengal, Uttar Pradesh, Bihar Orissa
Big Companies: Fruit/Veggies Processing
Jam Hindustan Unilever, Mapro, Marico , Malas
PicklesPriya foods, Praveen, Desai Brothers, Cavin Kare, GDFoods
Sauce / Ketchup Hindustan Unilever, Nestle, Heinz
Juices / Fruit baseddrinks
Pepsi, Dabur , Parle, Godrej, Mother Dairy
Squashes Hindustan Unilever, Haldiram, Mapro
Ready to EatVegetables
Tasty Bite, ITC, MTR
3/5/2014 Mrunal [Food Processing] Supply Chain Management, Upstream Downstream requirements for Fruit & Vegetables, Confectionery industries » Mrunal
http://mrunal.org/2013/08/food-processing-supply-chain-management-upstream-downstream-requirements-for-fruit-vegetables-confectionery-industries.… 19/19
Potato chips Pepsi
Cooking pastes Dabur, Hindustan Unilever
Big Companies: Chocolate business
Company brands of chocolate/chewing gum etc.
PerfettiBrooklyn, Big Babool, Alpenliebe, Center Fresh, Chlor Mint, Golia,Cofitos
Parry’s/Lotte
Coffy Bite, Lacto king, Coconut punch, Caramilk, Madras Cafe, Soft-Spot, Flavoured Candy, Mango, Sunshine, Shakti, Pineapple
Parle’sMelody, Mango bite, Kismi, Poppins, Rola cola, LuxDairy,Peppermint, Rosemint
GDC/Joyco
Boomer, Bonkers, Donalds,PimPom, Mickey,Bonkers
CandicoMinto, After smoke, Candy king, Americano, Orange-tutti frutti,Drum Beat, Vanilla Roll, Elaichi roll, Big Freedom, Jumbo-Gumbo,LocoPoco, Minto-Fresh
Ravalgaon Pan pasand, Mango mood, Coffee breakSupreme,
Nestle Polo, Allen’s Splash, Soothers, Toffo Butter, Fruit Rings, Fox’s
Cadbury’s Googly, Mocka, English toffee, Frutus, Gollum, Eclairs, Pops.
Next time we see upstream downstream issues related to milk-meat-marine, tea-coffee-liquor-oil etc.
URL to article: http://mrunal.org/2013/08/food-processing-supply-chain-management-upstream-downstream-requirements-for-fruit-vegetables-confectionery-industries.html
Posted By Mrunal On 29/08/2013 @ 18:42 In the category Economy