Indian Economy - News & Discussion Oct 12 2013

[nandakumar]

I want to narrate a story which is instructive in the context of wastage of vegetables and fruits before it reaches the dining table. My father-in-law, a retired professor of statistics did a socio-economic profile a nomadic tribe in Tamil Nadu called the Narikoravas. Their traditional occuptation was hunting birds with catapults and in more recent times they have branched out into bead making, rag picking and so on. But 50 years ago, they would supplement their kills with foraging for food that is thrown away in weddings and other community celebrations. His research led him into obtaining some insights about how they preserved food. They would carefully scrape out the left over food from plaintain leaves that is thrown in a heap in front of wedding halls and pack it in tins. They would then expose it to sunlight till the last drop of moisture is drained out from the food thus gathered. They had a stock of food at any time. As they explained it to my father-in-law, whenever they had to eat, they would just add water to the content and boil it for a piping hot meal that could be a mixture of sambar rice, rasam, an assortment of vegetables and so on. As he narrated the story to me, the food was perfectly fine from a hygiene point of view if you can desensitise yourself to the circumstances under which it was gathered. I mean, it is not as if the narikoravas were dying of diarrhea or amoebiasis etc. Their population is shrinking but that was from reasons other than had to do with their food habits. The point I am driving at is this. Dehydration of vegetables (not sure about fruits, though) ought really to be a low-cost and distributed manufacturing process. To my limited understanding, vegetables that are prone to rapid degeneration (tomatos, for instance) or which require special agro-climatic conditions and so can be grown only in certain times of the year eminentaly or only in some places lend themselves to low-cost technolgies of preservation. Do we really need big-retail to be involved in this or even FDI in retail? So why has this not taken off? Apologies if this sounds naive. Would glad to have the response from more knowledgeable members on the subject.

Edited once for language.

[amit]

I want to narrate a story which is instructive in the context of wastage of vegetables and fruits before it reaches the dining table. My father-in-law, a retired professor of statistics did a socio-economic profile a nomadic tribe in Tamil Nadu called the Narikoravas. Their traditional occuptation was hunting birds with catapults and in more recent times they have branched out into bead making, rag picking and so on. But 50 years ago, they would supplement their kills with foraging for food that is thrown away in weddings and other community celebrations. His research led him into obtaining some insights about how they preserved food. They would carefully scrape out the left over food from plaintain leaves that is thrown in a heap in front of wedding halls and pack it in tins. They would then expose it to sunlight till the last drop of moisture is drained out from the food thus gathered. They had a stock of food at any time. As they explained it to my father-in-law, whenever they had to eat, they would just add water to the content and boil it for a piping hot meal that could be a mixture of sambar rice, rasam, an assortment of vegetables and so on. As he narrated the story to me, the food was perfectly fine from a hygiene point of view if you can desensitise yourself to the circumstances under which it was gathered. I mean, it is not as if the narikoravas were dying of diarrhea or amoebiasis etc. Their population is shrinking but that was from reasons other than had to do with their food habits. The point I am driving at is this. Dehydration of vegetables (not sure about fruits, though) ought really to be a low-cost and distributed manufacturing process. To my limited understanding, vegetables that are prone to rapid degeneration (tomatos, for instance) or which require special agro-climatic conditions and so can be grown only in certain times of the year eminentaly or only in some places lend themselves to low-cost technolgies of preservation. Do we really need big-retail to be involved in this or even FDI in retail? So why has this not taken off? Apologies if this sounds naive. Would glad to have the response from more knowledgeable members on the subject.

Edited once for language.

Very interesting point and thanks for sharing.

What your father-in-law observed the Narikoravas doing is essentially a crude form dehydrating food to preserve it and then re-hydrating by adding water when they want to eat. A lot of the instant ready to eat packaged meals available in retail shops today use the same principle.

While undoubtedly this is a cheaper option to refrigeration, I wonder if it would have mass appeal. For example would you want to buy your beans, cabbage, cauliflower etc in dehydrated packages or as actual vegetables?

In some ways this reminds me of the Tata Nano. On the face of it, it was the perfect car for people aspiring to move from two wheelers to a four wheeler. However, IMO one reason why it was not the next Volkswagen Beetle was because it did not meet the aspirational desire to move up - in terms of status - that drives a lot of people to upgrade from a two-wheeler to a car, the same desire that drives first time car buyers to covet the next higher specs car model.

In the context of our current discussion, as people earn more they will aspire to eat better. Even though from a food nutrition point of view, dehydrated vegetables are quite alright, I think most people would rather buy the actual vegetables.

IMHO dried vegetables will never be mainstream, it can at best fill up a niche. This is not only true for India but throughout the world.

I'm also curious why so many people seem to associate a sort negative connotation to FDI in organised retail, in fact to retail in general? We are welcoming FDI in far more sensitive sectors and not worrying about it.

The only people who will suffer if there's a direct connection between the farmer and the retail chain is the Mandi thekedars who grow fat by short changing the farmers. They are small in number but very politically powerful.

[Yagnasri]

Dehydrating of vegitables is done on regular basis in Telugu lands also. It is called vorugulu or something like that. Brinjal, Green Chilli etc are dried in hot sun etc and used through out the year. Papad is also one of the other example. May be we need explore this more than refrigeration way.

[gakakkad]

it is even done for space station residents..it can be done on a limited scale..but it won't be culturally or perhaps even nutritionally acceptable on a large scale...

[Yagnasri]

it is even done for space station residents..it can be done on a limited scale..but it won't be culturally or perhaps even nutritionally acceptable on a large scale...

In AP it is acceptable sir. At least in old days. I do not see any reason for it to be nutritionally not being acceptable. All we may have to do is to keep it dry in a sealed cover,box etc. Large scale can be done by keeping things in small size boxes etc, properly air sealed. Another thing is to treat the vegetables with Redio active thing. I do not know how it works, but remember seeing in an exhibition of BARC or some thing like that some 35-40 years back.

[kmkraoind]

iPhone-maker Foxconn targets 10-12 facilities in India

GUIYANG, China: Taiwan's Foxconn Technology Group, the world's largest contract electronics manufacturer, is aiming to develop 10-12 facilities in India, including factories and data centres, by 2020, company chairman Terry Gou said on Tuesday.

The company could spend a "few billion dollars" on developing the facilities, said Gou, whose company's listed flagship unit is Hon Hai Precision Industry Co Ltd.

Gou was speaking in an interview on a bus on the outskirts of Guiyang in China's southern Guizhou province, where the company has a manufacturing facility.

Foxconn is the largest contract manufacturer for Apple.

[amit]

Re dehydrating vegetables: I think an important point is being missed. If you want to do it in a large scale industrial level you can't depend on the sun.

It will have to be done using electrical power to kill germs etc. Since this whole discussion on dehydration started as cheaper way to preserve vegetables and bring them to consumers, has anyone considered the cost of industrial level dehydration? To be successful it can't be a backyard science project.

Also people are not giving due importance to the cultural factor. What maybe perfectly acceptable for astronauts in space may not be as acceptable for the aam admi.

[Gus]

what is the percent of wastage in OECD and developing countries?

[panduranghari]

I'm also curious why so many people seem to associate a sort negative connotation to FDI in organised retail, in fact to retail in general?

Because that model, in the west, has spectacularly failed. Except for the few like Waltons, over all it has not benefitted the common man. The number of small traders who have lost businesses to the mega supermarket chains is an obvious loss. But the natural tendency for the big retailers is gradual encroachment on to the territory of other professionals based on products sourced from China. I think you know about all this.

[panduranghari]

what is the percent of wastage in OECD and developing countries?

15 million tonnes in UK alone.

[amit]

Boss when you talk of food wastage you need to remember that there are two types of wastage. One is the excess food that is bought but not eaten - a simple example would be a half eaten sandwich.

The other is the farm side waste, that is food crops which go to waste because they don't reach buyers due to supply bottlenecks.

India's problem is the latter. Needless to say in the first type OECD countries are way ahead.

Regarding farm side wastage, if memory serves me right, Malaysia, for example has around less than 10 per cent. And that's quite a common ball park Inn.

[amit]

Because that model, in the west, has spectacularly failed. Except for the few like Waltons, over all it has not benefitted the common man. The number of small traders who have lost businesses to the mega supermarket chains is an obvious loss. But the natural tendency for the big retailers is gradual encroachment on to the territory of other professionals based on products sourced from China. I think you know about all this.

Oh yes I know all about the rhetoric behind this story. Perhaps you can provide some empirical data to go along with the story? And yes something a bit more scholaristic than all those "see how evil Walmart is".

The central point is while this debate goes on farm side wastage in India remains an unforgivable 33 per cent. And despite being the world's largest vegetable producer there is negligible export.

[panduranghari]

This debate has been had in the past. With remarkable detail including data points and examples too. Is it worth rehashing the same arguments?

Without detailing everything, just this is more than enough. It gives a proper perspective. http://www.amiba.net/resources/studies- ... ed-reading

With regards to food wastage, this lecture is very useful. x post from agriculture thread
https://www.youtube.com/watch?feature=p ... o3sxaeLUqg

[Picklu]

In bangalore nowadays, a juice shop inevitably complement a vegetable/fruit shop side by side. Reducing wastage chankiyan baniya style

[Supratik]

We have discussed this before. The Walmart model has been investigated as to cost-benefit analysis and rejected. There is no reason why Indian companies cannot scale up and bring in technology to make the market more efficient. That will require incentives and patience. It is not like building a Rafale jet that we desperately need to invite Walmart.

[A_Gupta]

"Addressing Concerns of MNCs: The green channel
The special cell to facilitate operations of South Korean firms in India is the third such platform being set up by the Centre. Fast-track panels for investors from Japan and the US are already in place."
http://indianexpress.com/article/india/ ... n-channel/

--- Is there a better thread for this kind of news-item? Thanks!

[Suraj]

Suraj,

IMO you are spot on when you say the opportunity cost of 33 per cent vegetable and fruits wastage far outweighs electricity cost. Building a huge network of cold storages is only one part of the solution. There's one missing element here. And that's the need for refrigerated containers and trucks to transport cold storage products from the godowns to the retail markets.

Additionally, once you refrigerate vegetables/fruits you need to keep them that way till they are picked up at retail outlets by buyers.

The question is, who is going to invest in the several thousand refrigerated trucks and containers as well as the supply chain that's required to ensure smooth system whereby farming produce is picked up from the fields, transferred to cold storages and then distributed across the country to retail shops?

In my view this can't be done with our traditional Mandi system and we need organised retail.

Welcome back on this thread, amit. Stick around this time

As to your questions, yes I agree with you that organized retail is what is needed. I also think that Modi is far more shrewd in this regard than we give him credit for. If he started this entire effort by attempting to open up FDI in retail, aka the 'Walmart invasion!' political hot potato, the entire thing will die a quick political death simply because any strenuous effort to argue that they'll invest in backend storage will be drowned out by the standard handwaving and posturing.

It's a far better approach to seed the food processing and storage infrastructure through a publicly funded food park system, combined with regulatory environment (e.g. a hygiene and food processing standards organization), and subsequently divest of the government stake in these, for a profit. As these food parks become profitable entities, private corporations with far better expertise will invest in the business. The government simply acts as the seeding entity, driving the business, and then stepping back. Modi doesn't have a prior history of being a statist , but he does recognize that sometimes the government has to do the initial hauling.

Providing the early investment and regulatory framework is the government's job here, and they're doing it properly so far. Failing to do so can hurt initial private ventures and set back the long term market development by years. There was a prior case study of such an effort gone wrong; NDA-1 invested in roadbuilding, and Reliance got excited, opening up 1500 petrol bunks along these roads. UPA came into power, and the subsidies to state owned oil companies quickly made Reliance's business unprofitable. They only recently revived all those petrol bunks, after NDA-2 came to power:
May 2008: Reliance shuts all 1432 petrol pumps
May 2015: Reliance to reopen all petrol pumps this year

To me, the food park ecosystem is meant to create an environment that gets the population used to quality processed or refridgerated food, combined with greater off seasonal availability and price stability, such that any effort to roll all this back to the mandi system is doomed to be a political failure, because people will not countenance the loss of greater standard of living that touches everyone with access to this network. When such an economic state comes to pass, the opposition to FDI in retail will die a natural death with it. So, I see this effort as a smart political exercise in the process of accomplishing a substantial long term economic goal.

[arshyam]

R Jaggi is on a roll these days, probably one of the most sensible columnists out there.

In year 2, Modi must focus on jobs, jobs, jobs: He needs this Gang of Five to deliver - R Jagannathan, Firstpost

The one thing Modi can learn from his first year’s experience is something no will tell him about: do less, not more. He should not launch so many initiatives that he under-delivers on most of them. This way, he will be a sitting duck for his opponents, who can pick and choose his failures to paint him as a gasbag who talks more than he acts. From Jan Dhan to Niti Aayog to Namami Gange to Make in India to Jan Suraksha to Swachch Bharat to Smart Cities, to bullet trains, to Sagar Mala and the pursuit of black money - to name only some of Modi’s trademark schemes and catchwords from Year One - Modi's biggest risk going forward is failure due to initiative overload.

He will surely fail substantially if he does not imbibe the central message of effectiveness as enunciated by late management guru Peter Drucker in The Effective Executive. Since Modi's government is driven by the idea of an Executive Prime Ministership, he has to focus, focus, focus.

The central message of Peter Drucker's book is to "get the right things done", and this means focusing on the one or two things that matter, and not spread executive time too thinly over many objectives. Drucker reckons that no executive can be successful if he or she focuses on more than two goals at any one time.

The challenge for Modi is clear; in the next four years, he has to put his signature on and deliver in spades on the one major objective that is supreme. He has to choose secondary objectives that support this one over-arching goal so that he has a chance of being re-elected in 2019.

The one over-arching goal of Modi’s prime ministership is jobs. If he can revive growth in such a way as to create plenty of jobs everywhere, India will vote for him again. Toilet-building, cleaning the Ganga and Make in India will mean nothing without jobs.

The central theme of the remaining four years of the Modi government must thus be job creation through enabling executive and legislative action. Modi has to use each succeeding year to define the secondary objectives that will support his primary objective of jobs.

So, Modi's work in Year Two is to think, speak and act only on jobs, jobs and more jobs. Every action of his must have jobs as his theme. The corollary to this theme is that Modi must be directly involved in achieving this goal; when it comes to other objectives, he should empower and devolve it to competent ministers.

Five ministries hold the key to delivering jobs growth. These are railways, surface transport, rural development, defence and finance, which is the enabler of productive government spending.

This means Modi must preside over two cabinets - the general cabinet which will have all ministers (as now), and a jobs super-cabinet comprising himself, Finance Minister Arun Jaitley, Transport and Ports Minister Nitin Gadkari, Railway Minister Suresh Prabhu, Rural Development Minister Rao Birendra Singh and Defence Minister Manohar Parrikar.

This super-cabinet must be driven to achieve very high stretch goals as quickly as possible. The turnaround must happen this year, so that the economy is chugging along nicely by 2019. Luckily, all the members of this super-cabinet are competent individuals.

Looks like NaMo is already thinking along the lines of what Jaggi is saying:

Using the Drucker principle, Modi’s brief for Gadkari is to get national highway building up to 30 km a day, and develop 12 port cities by 2015, as reported by Economic Times. Gadkari seems upto the task.

Now for some back patting, good to see someone in the MSM is also thinking along the same lines as I had outlined in my rather lengthy posts in the railways thread.

Suresh Prabhu has to make the Indian Railways the engine of growth by investing in new tracks, high-speed freight corridors, and extend the rail network. What Vajpayee did with his Golden Quadrilateral national highways project, Prabhu has to do with the railways. We need a Golden Quadrilateral Rail Network by 2019. An efficient and fast railway network will do for the Indian economy what the telecom revolution did for us in the first decade of the 21st century.

Rao Birendra Singh has to build rural roads and get the Land Acquisition Bill passed so that infrastructure can be built and farmers provided higher paying jobs outside low-value agriculture. And yes, while building rural roads is a no-brainer, he would do well to reposition the Land Bill as a jobs and incomes effort, and not about confiscating the poor farmer's only asset.

But what is a defence minister doing on the jobs super-cabinet? Simple: defence is the easiest sector to kick off a Make in India and manufacturing revival. Parrikar has to use his defence budget to build more armaments projects in India - from guns to tanks to howitzers to fighter aircraft to warships and submarines. Modi's Make in India has its best chance of success in defence because unlike normal manufacturing industry, which has to be competitive and profitable (and also require land, which may become expensive), industries in the defence business need to pass only one crucial test: whether they are good for national security or not.

India has for too long been importing defence goods and armaments, spending huge amounts of foreign exchange and helping jobs elsewhere. Making defence items in the country will not only make us less dependent on foreign suppliers but also boost local manufacturing and improve our ability to develop and absorb high technology. Remember the ability to make war has huge beneficial impact on civilian technology. It is worth recalling that the internet itself was the creation of the US defence establishment.

Arun Jaitley's main job, apart from passing the GST bill, will be to raise resources for helping his four key spending ministers to invest in projects and create jobs. Jaitley has to facilitate the shift of government spending from wasteful subsidies to productive investment. This means he has to speed up the disinvestment process and recapitalise banks quickly so that the capital spending and lending cycle can be revived quickly.

So these are the new big five?

Modi's (and India's) political future depends on these five ministers - Jaitley, Gadkari, Prabhu, Parrikar, and Birendra Singh.

[Theo_Fidel]

Food refrigeration works in the West because people can afford to pay to have their Lobsters grown in Maine and shipped to Montana in a refrigerated truck or a Tomato is grown in California and shipped to South Carolina. In India people are not willing/unable to pay higher prices for such products. In any case this not necessarily more efficient. The other reason for mechanization in the west is to reduce labor costs. That pressure is still not high in India. Refrigeration makes food more expensive, sometimes dramatically so. Not less expensive, so sadly there is no low hanging fruit here...

Technically rice, wheat, dry peas, beans, channa, chillies, etc are amongst numerous veges/foods that are already shipped dehydrated. There maybe a few more opportunities but unlikely to be a dramatic improvement.

[Suraj]

While that may generally be true, the opportunity gains arising from preserving a full 33% of lost produce is also deflationary in nature. Unless calculations account for that as well, it's not accurate to claim that refridgeration adds costs. The latter implies a comparison between X quantity of unrefrigerated food and the same X quantity of refrigerated food.

But in reality in India, the price differential is between X quantity of refrigerated food vs 0.67X quantity of unrefrigerated food. This is an ideal argument; I know there's always some wastage, but the larger point is you're not comparing the same quantity of food, and in fact the the difference in amount of food you're comparing is enough to feed anywhere between 100-250 million mouths.

Not losing out that much extra food - a 50% increase in supply over the current level where 33% is wasted - is massively deflationary. In a western environment where most food is refrigerated, the incremental cost differential of locally sourced unrefrigerated food from remote sourced refrigerated one is visible, but in India, the cost calculations in the present situation are vastly different. Just cutting the wastage from 33% to 20% can transform the food security picture dramatically.

While cereals and pulses don't require refrigeration, their consumption per capita is also plateauing, with a greater emphasis on vegetables, dairy and meat, which all benefit from refrigeration.

[Virupaksha]

Suraj,

India is already surplus or near surplus in production of most essential food items. As there has been no famine in recent history in India, I really dont know where these extra 100-250 million mouths are going to come from.

World as a whole has been food surplus since atleast 2-3 decades.

[Suraj]

What is the definition of 'food surplus' here ? I think it's a very loaded word, considering the nutrition situation in India. I'd rather see such a statement made on the back of exhaustive data rather than as a bare assertion. For example, how much of income goes towards food across income groups, and what is the breakdown in intake ? I think these are all important questions to be answered before such an assertion can be made.

The frequent inflationary spikes in various food items alone is enough proof that storage, refrigeration and distribution require massive investments. About 2 days ago, there was someone in the politics thread demanding to know what the PM is doing about the price of dal.

[Theo_Fidel]

India’s nutrition problems have nothing to do with the lack of food. I think we should first not make that connection!

First other than unusual spikes, India has some of the cheapest vegetable prices in the world. This week prices in Chennai were about Rs 15-20 for a kg of Tomato’s. This works out to 12 cents per lb! I challenge you to buy at that price anywhere else in the advanced world. Even at this low low price the vegetable tomato is out of reach for the majority even in TN. That is the real tragedy... ..not refrigeration...

WRT spikes, it has everything to do with the lack of so many things. transportation, roads, commodity trades, opaque farming data, bad supply projections, poor tracking of diseases, uneven irrigation, dependency on weather,… ..one could go on and on, and this has been said many times before too. Refrigeration is not a magic bullet for inefficiency.
------------------------------------------------

As pointed out India and much of the world is food surplus and likely to remain food surplus at least for our lifetimes. Refrigeration is quite expensive. One data point. Last November open air 20 ton truck with 2 labors from S.TN to vazhakulam. Rs 8,000. Refrigerated truck with 2 labors was Rs 20,000 +/- + cost of diesel fuel. Cost add to Rs 30,000 load of Pineapples.

I think the equation will change once the general Indian population becomes much wealthier. Per capita income above $10,000. But until then such costs are a luxury. I cannot justify refrigerating my fruit for instance. Will simply be priced out of the market. I tried it once many years ago and got laughed at for asking for better price.

It does work for a few items, for instance potato’s, because the entire harvest comes in 2 month period price plummets to Rs 1 – Rs 2 per kilo. So wholesalers in some areas can hold till prices rise during monsoon. Tomato harvest is year round, so is coconut, pineapple, cucumber, brinjal, ladies finger, etc. It does work for Dairy and Meat, but these are much more compact foods. In any case even with these it is cheaper to transport the animal live to the place of consumption. That is what all those Tempo's transporting live chickens are.

[Virupaksha]

Suraj,

"how much of income goes towards food across income groups"

What does this have to do with food surplus? US and Europe dump vast amounts of food into oceans and pay farmers not to farm to keep prices high.

Anyway providing excessive private " storage, refrigeration and distribution" without effective govt control is fraught with danger as the bengal famine of 1940s have shown. What would be the laws managing hoarders, monopolies and oligopolies? There has to be an parallel increase in govt structure which takes care of such issues. Food security cannot be and should not be outsourced. There have been many reports that rise in onion prices which changed govts around 1998 was deliberate hoarding to effect that rather than a crippling shortage.

[Picklu]

Lesser wastage in food at supply side also means lesser land to cultivate, leaving more land for other productive things like factory, forest, green energy park and other real estate. Similarly less land to irrigate too. This creates a virtuous cycle.

[Suraj]

WRT spikes, it has everything to do with the lack of so many things. transportation, roads, commodity trades, opaque farming data, bad supply projections, poor tracking of diseases, uneven irrigation, dependency on weather,… ..one could go on and on, and this has been said many times before too.

None of which is an argument against investment in storage and refrigeration. 'Food surplus' quotes the production data, which has very little relevance to level of access, as the constant spikes in food prices, as well as the corrosive effect of high food price inflation indicates. A spot price quote of a single item in the high season - e.g. tomatoes are very cheap - does nothing to address this. A quick google search gives me this from mid 2014:
Inflation down but tomato prices up 250%

In the past month, tomato prices have risen by over 200 per cent in many cities, touching 250 per cent in Delhi and a back-breaking 300 per cent in Mumbai. Onion prices have risen by 50 to 70 per cent. There is no fall in production or arrivals in wholesale mandis but the prices are still rising.

The Make in India site describes the mandate of the food parks:
Food processing

The Mega Food Park Scheme, based on cluster approach, is modelled on hub and spoke architecture. It aims at facilitating the establishment of a strong food processing industry backed by an efficient supply chain, which includes collection centres, central processing centre (CPC) and cold chain infrastructure.

Governments have fallen at the central and state level over among other things, the price of basic foodstuffs. There's also no question that there's enormous wastage.

I'm sorry, but one person's experience doesn't do enough to prove that reducing wastage through greater investment in food processing, is untenable. All it proves is that you're too much of a small fish to recoup the investment in food processing investment on the base of your own small production. As long as most producers are like you, the current situation will remain - the incremental cost of investment is too high to recoup easily, and therefore, wastage - a smaller spot cost, but a much larger long term cost - is preferable. That is the very reason why a government push for a food park system, and corresponding initial investment by them, helps break the current deadlock, because they can invest more, spread over a much larger amount of produce collected from a large number of producers, as opposed to one guy trying to bring about change but being too small to economically execute that change. No offense meant personally; it's simply a question of economies of scale.

[Suraj]

Suraj,

"how much of income goes towards food across income groups"

What does this have to do with food surplus?

It has everything to do with it. What is the 'food surplus' in the first place ? We have 33% wastage in produce and constant unremitting food price inflation, combined with spikes of 2-3x increase in the prices of certain food stuffs. Surplus output ought to engender stable or deflationary food price conditions, but that's not been the case at all. If you produce a lot but can't deliver it effectively, what's the point of talking about the production level ?

[disha]

As pointed out India and much of the world is food surplus and likely to remain food surplus at least for our lifetimes. Refrigeration is quite expensive. One data point. Last November open air 20 ton truck with 2 labors from S.TN to vazhakulam. Rs 8,000. Refrigerated truck with 2 labors was Rs 20,000 +/- + cost of diesel fuel. Cost add to Rs 30,000 load of Pineapples.

I think the equation will change once the general Indian population becomes much wealthier. Per capita income above $10,000. But until then such costs are a luxury. I cannot justify refrigerating my fruit for instance. Will simply be priced out of the market. I tried it once many years ago and got laughed at for asking for better price.

It does work for a few items, for instance potato’s, because the entire harvest comes in 2 month period price plummets to Rs 1 – Rs 2 per kilo. So wholesalers in some areas can hold till prices rise during monsoon. Tomato harvest is year round, so is coconut, pineapple, cucumber, brinjal, ladies finger, etc. It does work for Dairy and Meat, but these are much more compact foods. In any case even with these it is cheaper to transport the animal live to the place of consumption. That is what all those Tempo's transporting live chickens are.

I am surprised that a data point on pineapples is extended to tomatoes to negate food storage and processing centers.

"Refrigerated" storage and transportation is just one thread of the entire chain. For example take the case of Onions and Potatoes. When the potato crops come in, there is a huge spike in supply and to smoothen that potatoes need to be stored. They do not have to be "frozen" but need to be stored in a cool and dark space. That is basically stored at 5C in a dark container. This can be large warehouses under ground where the cost of "mass refrigeration" is actually cheaper. And they can be transported over say a day or two in non-refrigerated condition to the nearest demand spike. This same facility can store carrots, beets, squash and of course onions.

Given a proper road network, one can store all of the above in large warehouses in HP and supply them to large consuming centers in NCR during a demand spike which is at most 12 hours away - non-refrigerated - basically an overnight journey. Extend that logic to rest of India.

Now why stop at root vegetables., extend that same to : Bananas, beans, cabbage, cauliflower, peas, garlic, greens and other fruits.

There is huge difference between commercial refrigerated warehouse, its transportation and the end user packaged refrigeration. Commercial storage itself will more than half the wastage. And that will be a big thing - imagine your tomatoes at 5 Rs. per Kg. India can start exporting tomatoes then (I will not recommend it though, since it is exporting water out).

For the end user packaged refrigerated goods - If a village can get Amul/Vadilal ice cream - it sure can get a supply of refrigerated vegetables.

And do not worry about erratic electricity. Modi Sarkaar is already working on it. Of course, Delhi with AAPTards is another story.

[Theo_Fidel]

Suraj,

I never said that we should not industrialize our food supply. This a long term good thing for the nation. The equations I challenge are these.

Food Production + Refrigeration = Lower Prices.
Food Production + 30% waste elimination = Low Prices
Food Production + Industrialization = Low Prices

IME this is not true. Would like to see data that demonstrates otherwise. Direct retail price comparisons prove my point WRT fresh vegetables, processed foods, canned vegetables and the rest. In my personal practices it is not worth the effort at present in India. Of course in future the economic equations could change. Any steps I take forward raise my costs more than my savings.

BTW even after your 250% spike, Tomato will be ~ 30 cents a lb, Amongst the cheapest in the world and as you said liable to cause governments to fall. This is how price sensitive the Indian market is. What makes you think a 50% cost add for refrigeration will be acceptable. WRT your food parks, the only scope they have is export. There is no domestic market for such products except some niches at present. I don’t think much will come of it for domestic consumption. At least not till our overall income levels rise much higher.

My own opinion is that India is different from the Temperate west. We have a sub-tropical climate that allows year round cultivation over essentially 100% of the nation. Other than for a few items this makes it hard for value add products to compete with the local producers at the low low bargain producer prices. The only way this changes is with increased income levels, higher wages, demand for higher quality, tougher codes/standards and higher food prices.

[Suraj]

SMEs feel lost in Make in India days

Though optimistic that sentiment will improve over the next 18 months, many small business owners feel the "Make in India" programme did not highlight the contribution of small and medium enterprises (SMEs) in building the country's manufacturing prowess.

While efforts to improve the business environment did strike a chord, changes on the ground were still some time away, say many SME owners.

The proposal to roll out the goods and services tax in 2016 is making many SMEs apprehensive. Many feel the impact of the tax will be mixed, an opportunity for many, and a threat for some. "Many concerns of the sector are lost in the cacophony of big-ticket announcements by the government," says Anil Bhardwaj, secretary general of the Federation of Indian Micro and Small & Medium Enterprises (FISME).

One reason, feel many, is the ministry of micro, small and medium enterprises does not find adequate weight in the government's scheme of things. "The ministry needs to be empowered, its efforts to bring in change are often stuck in other ministries," says an SME owner who closely interacts with the ministry as part of an industry body.

MSME FACT SHEET

Indian MSME sector consists of approximately 45 million units
Produces more than 6,000 products, ranging from traditional to high-tech items
High product diversification: 67% of its produce is from manufacturing goods, followed by 17% from services, and 16% from repairs and maintenance
Employs around 101 million people
Accounts for 45% of the manufacturing output
Contributes 8-9% to the country's GDP
Accounts for 40% of the country's exports

DBTL enrolment finally stops with 128.7 million beneficiaries

The enrolment of beneficiaries under the ambitious modified Direct Benefits Transfer for LPG (DBTL) scheme has finally stopped at 128.7 million people, oil ministry, data show.

This translates into annual subsidy savings for the government to the tune of Rs 5,060 crore at the current prices that was linked to the rest 21.3 million customers. These include mostly fake accounts and people who have voluntarily surrendered subsidy or lack bank accounts.

Prime Minister Narendra Modi on Monday listed the success of the scheme as a major achievement by his government. “We have ensured LPG subsidy is delivered directly to the bank accounts of more than 12 crore (120 million) customers,” he said while speaking at a public rally in Mathura on how the government has eliminated middlemen and agents from the system.

Business Standard had reported last month the pace of enrolment under the scheme, touted as the world’s largest cash transfer programme, had slowed down and was likely to stop soon, weeding out 20-30 million mostly duplicate accounts. The government had budgeted for a total petroleum subsidy outgo of Rs 30,000 crore in the Union Budget 2015-16, including Rs 22,000 crore for LPG. The estimate was recently increased to Rs 40,000 crore.

The government had already identified and eliminated around 10 million fake connections under a de-duplication drive over the past two years. The latest round of elimination through enrolments under modified DBTL has added to that list.

[Suraj]

Suraj,

I never said that we should not industrialize our food supply. This a long term good thing for the nation. The equations I challenge are these.

Food Production + Refrigeration = Lower Prices.
Food Production + 30% waste elimination = Low Prices
Food Production + Industrialization = Low Prices

IME this is not true. Would like to see data that demonstrates otherwise.

But it's you who has to provide data otherwise. Arguably you've provided data, but in the form of your own limited produce, processed with your own investment. However, you simply don't have enough scale to claim that the investment is worth it. The whole purpose of what the food parks attempt is public investment and scale. Your own argument has merit if the proposal is that everyone maintain their own independent cold storage facilities, which clearly is not economical.

You argue that a 50% increase in supply (in other words, elimination of 33% wastage) does not lead to low prices. How much data does it take to prove that ? In what consumable item does a 50% increase in supply not drive down prices ? Despite the disjoint argument you've made, in real world, the three equations you quoted are not disjoint. They're really:
Food Production + Refrigeration + Industrialization (storage and supply chain) = 30% waste elimination + low prices

Here a piece of data for a value on wastage:
* Rs.13300 crore in fruit and vegetable wastage
* Rs.44000 crore in overall food (incl grain) wastage
India wastes fruits and vegetables worth Rs 13,300 crore every year: Emerson study

India, the world's second largest producer of fruits and vegetables, is throwing away fresh produce worth Rs 13,300 crore every year because of the country's lack of adequate cold storage facilities and refrigerated transport, according to data compiled in a new report by Emerson Climate Technologies India, a business of the US-based manufacturing and technology company Emerson.

The Emerson food wastage and cold storage report cites studies that have pegged the value of fruits, vegetables and grains wastage in India at Rs 44,000 crore annually. Fruits and vegetables account for the largest portion of that wastage. Eighteen per cent of India's fruit and vegetable production - valued at Rs 13,300 crore - is wasted annually, according to data from the Central Institute of Post-Harvest Engineering and Technology (CIPHET). Two of the biggest contributors to food losses are the lack of refrigerated transport and the lack of high quality cold storage facilities for food manufacturers and food sellers.

Without improvements to its "cold chain" infrastructure, from farm harvest to table, India's food problems will remain vast and are likely to grow, warns the Emerson report.

Currently, India has 6,300 cold storage facilities unevenly spread across the country, with an installed capacity of 30.11 million metric tonnes. Studies have shown this is half the amount of cold storage facilities that India actually needs. Cold storage capacity for all food products in the country should be more than 61 million metric tonnes. In order to reach that target, the report says an investment of more than Rs 55,000 crore is needed by 2015-2016 just to keep up with growing fruit and vegetable production levels.

"While progress is being made, this report confirms the cold storage situation is more acute than many realize. Emerson is seeing this in the marketplace and we commissioned this report to keep the spotlight on the issue," said Pradipta Sen, president of Emerson's India, Middle East and Africa region. "India has more than 1.2 billion people. Better protection of the integrity of our fruits and vegetables from harvest to table should be of paramount importance. Part of the solution is more effective, more efficient and well-thought-out cold storage infrastructure in India."

While financial investment in cold storage facilities and refrigerated transport is vital, the Emerson Climate Technologies report also highlights additional challenges faced by India's cold storage industry today. The three biggest challenges are high lifecycle costs for a cold storage facility that typically needs land and buildings to hold 6,000 metric tonnes of food; uneven distribution of cold storage facilities with 60 per cent of existing facilities located near the point of production in just four states and too few closer to distribution points in the other 24 states; and low awareness of best storage practices amongst industry players.

Food worth Rs 50,000 crore goes waste in India every year: NIFTEM
A value of aggregate inefficiencies:
Bitter to Better Harvest: Post-green Revolution : Agricultural and Marketing

According to McKinsey & Company (1997) the total inefficiencies were valued at Rs.50,000 crore in 1998, which was 20% of the total value of food produced in India

A lower wastage level means a lower subsidy burden, higher availability, price stability, and as Picklu pointed out, less land pressure.

[Theo_Fidel]

I think we are being confused here and to be honest being wildly mislead by private sector marketing types like Emerson corporation. First while 18% of food is lost in India do you know what the number is in the industrialized west . Try 42% for NA. Yes 42% of food in USA is wasted. Of course 2/3 is by the consumer so lets say 15% loss before the consumer. The same number for India backing out the consumer is... ..yes the same 15%. Here is what FAO had to say on the subject from the link below. As you can see from the link below the total food losses are actually higher in NA & bit lower in EU compared to Asia/South Asia. If you look carefully you will notice that South Asia (Presumably India) High losses are in the post harvest and processing phase. For NA the losses are high in the Agriculture, distribution and consumption stages. Distribution losses are actually quite low. Which pretty much backs up what I instinctively suspected. While industrialization may save costs in one area it will increase costs in another. In effect food volume available will remain unchanged. Costs will be much higher. The benefits will be Kashmir valley will get Kerala coconuts for lower price year round and Kerala will get Kashmir peaches year round. For a suitably inflated price of course.... ...none of this to say this not what we should do. Just don't expect it to save any real money or even quantity of damaged food.....


http://grist.org/food/reducing-food-was ... our-plate/

[vina]

The benefits will be Kashmir valley will get Kerala coconuts for lower price year round and Kerala will get Kashmir peaches year round

EXACTLY. What this back end supply chain will do will smoothen out the demand/supply spikes by season and spread it evenly through the year. You will get price stability. That is what will affect inflation levels by doing away with spikes, rather than lowering price points.

The other thing is, you can vastly increase agri exports with better post harvest and distro tech.

[member_23365]

With respect to cold storage, I would like to share my friends experience whose family is apple grower from HP. They used to sell whole harvest in Azadpur mandi in Aug-Sept.
My friend he lives in Delhi, last to last season he persuaded his family to put half crop in cold store( there is a cold store near Azadpur mandi owned and operated by Himanchal govt. for apple growers of HP, very nominal storage fee). In that season he made 50% more than what he would have got in mandi. Last season his family put whole harvest in cold storage although in mandi they were getting double rate from previous season. His relatives who promised to store with him backed out at last moment b'cas price offered in mandi was too good.
They would have got 15 lakhs had they have sold the entire harvest in Aug-Sept. By Feb he was finished with entire stock and had 27 lakhs in pocket.
There are avenues available but farmers don't have full knowledge and don't have faith in them as well. Once more farmers are aware of avenues they will demand more such resources.

[Suraj]

I think we are being confused here and to be honest being wildly mislead by private sector marketing types like Emerson corporation. First while 18% of food is lost in India do you know what the number is in the industrialized west . Try 42% for NA. Yes 42% of food in USA is wasted. Of course 2/3 is by the consumer so lets say 15% loss before the consumer. The same number for India backing out the consumer is... ..yes the same 15%. Here is what FAO had to say on the subject from the link below. As you can see from the link below the total food losses are actually higher in NA & bit lower in EU compared to Asia/South Asia. If you look carefully you will notice that South Asia (Presumably India) High losses are in the post harvest and processing phase. For NA the losses are high in the Agriculture, distribution and consumption stages. Distribution losses are actually quite low. Which pretty much backs up what I instinctively suspected. While industrialization may save costs in one area it will increase costs in another. In effect food volume available will remain unchanged. Costs will be much higher. The benefits will be Kashmir valley will get Kerala coconuts for lower price year round and Kerala will get Kashmir peaches year round. For a suitably inflated price of course.... ...none of this to say this not what we should do. Just don't expect it to save any real money or even quantity of damaged food.....


http://grist.org/food/reducing-food-was ... our-plate/

There's a huge difference between wastage at consumption time, and wastage at wholesale distribution level. The former is a symptom of such an excess in availability that the population simply doesn't really care about the wastage. The latter is a symptom of lack of investment in handling, storage and distribution. From the graph, a full 87% of all losses occur even before the food item reaches the consumer. Whereas in NA, the number is 39% . Almost 2/3rds of the waste there occurs at consumption, while the comparable figure in India is less than 1/6th .

The above graph says nothing about the cost of food being higher in the west than in India. Further, food prices should be measured in PPP terms. Sure, tomatoes cost more in the US if you convert $s to Rs. So does a haircut, or even bottled water. And yet, Americans spend a far lower share of their income on food than we do.

As to the question of people not buying expensive processed food, that is strange argument - the largescale investment and industrialization itself engenders income growth. When one talks about massive investment in food supply chain development, that also generates substantial employment. Mar 2015: Centre okays 17 mega food parks for Rs 6,000cr

It is expected that these 17 parks, when fully functional, will create employment for around 80,000 persons and benefit about 5 lakh farmers directly and indirectly.

That's 5 lakh people like atamjeetsingh's friend benefiting, in addition to more people directly employed. There are 40+ food parks planned in all, with a guesstimate employment for 2 lakh people, benefiting say, 15 lakh farmers. That's just from the food parks themselves. Add all manner of additional investment in the food supply chain, and a lot of people stand to gain from this.

Once again, how can anyone claim that a 50% increase in food availability at the consumer's point of purchase NOT be deflationary ? Food wastage in the west is largely post purchase, where as that in India is overwhelmingly pre-purchase, which means availability is affected, price stability is generally poor and production data is not a particularly useful measure of surplus or deficient food availability to the customer.

[panduranghari]

SMEs feel lost in Make in India days

There is no reason for the SME's to complain.

N Sitaraman makes a good point to emphasize on our problems, our unique solutions.

[nandakumar]

According to the National Horticulture Board database (http://agricoop.nic.in/imagedefault/wha ... ok2014.pdf), India produced 16.2 lakh tonnes of vegetable in 2012-13. If we assume a growth rate of 4 per cent (quite a liberal estimate as the long term output growth has been in the region of 2 per cent per annum) this would have grown to 17.5 lakh tonnes by end 2014-15. If we assume a 33% wastage between farmgate to the dining table, the available output for the population is 11.7 lakh tonnes. As against this our population currently stands at 125 crore with over 65 age population at a miniscule 5 per cent. So given the predominantly young age profile of the population our vegetable requirement from a nutritional and balanced food perspective, we should be consuming around 300 gms per day. This translates into a requirement of 13.7 lakh tonnes. We are just within touching distance of what we annually need as vegetable output. Without any yield improvement or increase in acreage we can match our requirement provided we reduce our wastage. From this,we can make two points. The approximate balance between demand and consumption is a function reduced affordability among some sections of the population. Two, the price volatility would have been even higher if vegertable intake goes up even marginally as incomes rise in the economy. Is there a case for State intervention? Perhaps. What should be the contours of such an intervention is a matter of debate. It could be improvements in storage. Or it could be better logistics in reaching the produce to the consuming centres. Or a combination of both.

[amit]

To be frank I think we all have a tendency to over analyze a subject and this leads to hair splitting on points and counter points which results in a loss of focus on the actual problem.

Forget organised retail, forget FDI in retail, forget the urban legend that organised retail results in thousands losing their jobs. The problem is staring at us and we need a solution - any solution.

Just to refocus the discussion please see the following links:

http://www.eco-business.com/opinion/ind ... ood-waste/

What accounts for India’s chronic food insecurity? Farm output has been setting new records in recent years, having increased output from 208 million tons in 2005-2006 to an estimated 263 million tons in 2013-2014. India needs 225-230 million tons of food per year; so, even accounting for recent population growth, food production is clearly not the main issue.

The most significant factor – one that policymakers have long ignored – is that a high proportion of the food that India produces never reaches consumers. Sharad Pawar, a former agriculture minister, has noted that food worth $8.3 billion, or nearly 40 per cent of the total value of annual production, is wasted.

This does not capture the full picture: for example, meat accounts for about 4% of food wastage but 20 per cent of the costs, while 70 per cent of fruit and vegetable output is wasted, accounting for 40% of the total cost. India may be the world’s largest milk producer and grow the second largest quantity of fruits and vegetables (after China), but it is also the world’s biggest waster of food. As a result, fruit and vegetable prices are twice what they would be otherwise, and milk costs 50 per cent more than it should.

An estimated 21 million tons of wheat – equivalent to Australia’s entire annual crop – rots or is eaten by insects, owing to inadequate storage and poor management at the government-run Food Corporation of India (FCI). Food-price inflation since 2008-2009 has been consistently above 10%, (except for 2010-2011, when it was “only” 6.2%); the poor, whose grocery bills typically account for 31 per cent of the household budget, have suffered the most.

There are several reasons why so much perishable food is lost, including the absence of modern food distribution chains, too few cold-storage centers and refrigerated trucks, poor transportation facilities, erratic electricity supply, and the lack of incentives to invest in the sector. The Indian Institute of Management in Kolkata estimates that cold-storage facilities are available for only 10 per cent of perishable food products, leaving around 370 million tons of perishable products at risk.

http://www.ft.com/intl/cms/s/2/c1f2856e ... z38vHbs3XU

With India’s farm-to-fork networks still dominated by politically influential traditional traders and small shops, the country has struggled to modernise its food supply chain and attract large-scale investment into cold-storage, refrigerated trucks and other modern logistics.
As a result, much of India’s agricultural output rots – or seriously degrades – before reaching consumers, even as hunger and malnutrition remain.

According to estimates by the UN’s Food and Agriculture Organization (FAO), about 40 per cent of India’s fresh fruit and vegetables – worth an annual $8.3bn or so – perishes before reaching consumers. Each year, some 21m metric tonnes of wheat, especially grain – an amount almost equal to Australia’s total annual production – rots in India because of improper storage in the custody of the government-controlled Food Corporation of India.

In 2012, Delhi decided to permit up to 51 per cent foreign direct investment in supermarkets and other modern food shops – which many say is the necessary front-end to make a modern food-supply chain work.

“If you can aggregate demand, you can aggregate supply, build scale and make sure investments in the middle pay off,” says Bijou Kurien, former president and chief executive of Reliance Retail, one of India’s largest modern retailers.

According to a recent study by the Indian Institute of Management in Kolkata, cold storage facilities are available for just 10 per cent of India’s perishable produce – and are mostly used for potatoes – to meet India’s robust demand for chips. The study estimates that India needs storage facilities for another 370m metric tons of perishable produce.

But with so many obstacles confronting private groups – including a fragmented, tightly controlled market, and various government restrictions – such investments are unlikely to materialise rapidly.
“We have a modern system of food supply, but it is only addressing those who are at the higher level of income,” says Rosa Rolle, a senior agro-industry and post-harvest officer at the FAO’s regional office.

[Suraj]

Amit, thanks for those two references. They clearly take on the argument of 'food processing will make food expensive for poor SDREs' claim.

[Theo_Fidel]

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