The Food Processing department was under the agriculture ministry until Prime Minister Narendra Modi made it a separate industry, and appointed Harsimrat Kaur Badal as its head. Almost five years later, she is happy with the progress made in infrastructure building, and has a lot of plans in the pipeline.
Excerpts from an exclusive interview:
Why hive off food processing into a different ministry?
India is one of the largest producers of food in the world. We are number one the production of milk, and number two in fruits, vegetables, cereals, poultry and meat. So, we have a huge raw material base. But, we process only 10per cent of what we produce. As a result, we have high wastage.
This is because there is not enough infrastructure for storage, preservation and processing. We have been working for the past five years to boost this sector.
What are your immediate expectations from infrastructure building?
First, it will reduce farmer distress. To run the industry profitably, they will tell him the best practices to get the maximum yield. They will give him the best seeds, they will give him good technology, so that they get the best produce for the industry. It will uplift the farmer
It is one of the highest generators of employment. The mega food park and cold chain schemes employ a large number of women. Furthermore, the more [the food] processed, the more it will be preserved, and the more will be the availability. This means inflation stays in check. Cold storage and preservation will ensure year-long availability. So, it is a good idea for consumers as well.
Then, the more that is processed, the more that is preserved, the more will be the availability. This means inflation stays in check, you do not get those sudden spikes when prices are low in the season, [or] price spikes when the rains set in. Cold storage, preservation and all that will ensure there is availability round the year, so it is a good idea for consumers as well.
What was the industry like when it was segregated?
For the first two-and-a-half to three years, I just concentrated on taking forward from what I had inherited, which I will say [were] the Mega Food parks and the cold chains. However, they were on paper and nothing [was] on the ground
The Mega Food Parks were a very nice scheme launched in 2008. Under it, infrastructure was to be created on 50 acres, and the government would give Rs 50 crore subsidy to anyone putting up this common infrastructure—warehouses, sheds, food packaging, food processing, everything. Then, another 30 to 40 units could come and use this facility. So, instead of setting up the cold storage, processing and packaging units yourself, you could just go into that factory shed and plug and play and straight away start earning.
It was a very good scheme. 42 of these parks were sanctioned in 2008, and each park was to take [between] two and two and a half years [in order] to get operationalised. But, in six years, only two of them were! One was Patanjali, for which the credit goes to Baba Ramdev –— and not the ministry. The other one was Shrini Mega Food Park in Andhra Pradesh.
Why was it so?
Because a lot of them were sanctioned — like in Amethi — in VIP areas. Every time there [was] an election, there would be a groundbreaking ceremony and [despite] so much power and government being theirs…there were no intentions of putting these parks up. The intentions were something else.
We gave them all a hearing… and it became clear they had no intentions of putting them up. In Amethi, they said that they will put it up only if they get gas for electricity at a concessional rate. So I wrote to the petroleum ministry, which said they had no intention of giving it at a cheaper rate. Earlier too the petroleum ministry under the Congress government had said they would not give it at a concessional rate. So I again asked for it. And again they said there is no such scheme. The promoter said unless we get that, we are not putting it up. So it was cancelled. There were many like this... someone had not got the land in six years. Someone had no intention of putting it up, and they were allotted the parks with some other intentions.
So I cancelled all of them. I think they were 17 or 18...and then many more.
What is their status now?
With constant monitoring, we have already operationalised 15 in four years and there are another four that are ready to be inaugurated! By the financial year 2019-20, we will have operationalised at least 40 of them (because two have been cancelled again).
The Central government aims to double farmer’s income by 2022. What is your ministry’s role?
By how much can [a farmer] increase his production? There is a limit to that. But when he starts value adding… a kilo of potatoes sells for Rs 2, but a packet of chips sells for Rs 50. So, he has to go for value addition.
The Gram Samridhi Yojana is a major project (that will boost the unorganised food processing sector). It is going to be implemented by this ministry but is yet to be approved by the cabinet. [It will take about a year to distribute the Rs 3000 crore to small farmers [covered in the scheme]. The benefits of distributing that are going to go to another minister, but for two years I have worked on and created this scheme. It will be first tried out in four states — Uttar Pradesh, Punjab, Gujarat, and Andhra Pradesh.
With the mega food parks coming up, it is clear that jobs are being created. Each park will create at least 5,000 to 10,000 jobs. It will impact at least two lakh farmers directly and indirectly.
You also inherited the cold chain scheme.
There were about 80 projects that were sanctioned, of which 30 were made, and 50 were lingering. Not only have we completed these 50, but we have also sanctioned 101 [plus] 50 more. So, as of today, I have got 206 projects going [where] we have completed more than 60 per cent of them. Very soon we will be sanctioning another 30.
We are hoping to make a cold chain grid throughout the country for seamless transfer of produce from wherever there is production to wherever there is consumption.
Can you tell us about a scheme that is already operational?
The Pradhan Mantri Kisan Sampada Yojana was sanctioned in 2017, and three more schemes were added to it, for the backwards-forward linkages, so that even a group of small farmers could put up its own cold storage, do its own washing, cleaning and grading, and have its own small processing unit.
Any policy changes by this government?
We created a Rs 2000 crore fund in NABARD (National Bank for Agriculture and Rural Development) to provide cheaper credit to the food processing sector, as regular banks consider it risky and do not give them money.
When you took charge, was there a market for processed and packaged food in India?
When infrastructure started coming up, we realised markets were needed. That was when I asked for 100 per cent FDI in multi-brand retail of food produced and manufactured in India, which the government agreed to. That is when the likes of Amazon and eight or nine other companies came in. When I took over in 2014, the FDI was $500 million; we are close to a billion [dollars] now.
Did India have the technology for all this?
We needed not just technology, but the best of technology, to wake the world to what India is capable of.
We had Kisan Sampada Yojana where the government allocated Rs 6000 crores to spend in the next two years which was going to leverage Rs 31,000 crores worth of infrastructure, [an] agro-produce of 324 million metric tonnes was going to be agro-processed— [with] the value of this [around] Rs one lakh crore. With 12.5 lakh farmers [about] to benefit, and five lakh jobs to be created, the best of technology had to be brought in.
So in 2017, we held World Food India, which was the first mega event on [going] from farm to fork and everything in between, across all sectors of food. WFI was aimed at generating at least 10 billion over the next three-four years.
In those three days, I signed MoUs worth $14 billion, and [the groundwork] for 70 percent of those was started within the first six months — because six-eight months earlier, I travelled all those countries, and did all the homework, before [I signed] the MoUs. That's the kind of technology [and] know-how [that] the foreign companies were going to [bring to] and partner with our Indian companies.
Which farm produce needs to be processed the most?
Under Operation Greens, 500 million has been given for TOP — tomatoes, onions and potatoes — because these are used in every Indian household and the farmers growing these have been under maximum distress. When there is a glut, we partner with NAFED (National Agricultural Cooperative Marketing Federation of India Limited), which buys [the excess] at the market rate and sends it to the closest consuming place. This is a new scheme.
We have tied up with the World Bank for grants between Rs 1-10 lakhs — so the really small farmer or group of farmers can preserve or agro-process whatever they are growing. The ultimate aim is that the farmer has to move towards value addition, he just can't keep farming.
Whatever he is growing in the field and whatever he is able to sell in the market is good, but part of it he must [be] value [addition] to scale up his produce.
What is your biggest challenge?
The problem is the dissemination of the schemes to the farmers. If [all] the state governments are not proactive, a handful of states where the governments are proactive take advantage of all these amazing schemes.
On my part, I have made it possible for them to apply online, but it might not be easy for all farmers. The idea is that they can apply from anywhere, all the monitoring is done online, and they do not have to come here and grease the palms of babus. All the grants are given online, all the pictures are online, and there is no discretion. The farmer is generally illiterate.
Which states are the most proactive?
The most proactive state is Maharashtra. [Sharad] Pawarji had been heading this ministry (agriculture) for ten years. In those years, he managed to set up the systems well. There are good consulters, good ways of disseminating the information, the government is more proactive, and it is more demand driven. Andhra Pradesh [and] Gujarat [are also] very good.
How about Punjab, the agrarian state you come from?
Not a single minister from there has come and asked me for anything. I can show you a bunch of letters that I have written to them, saying “please make use of your quota”, but they are there just to delay and have projects for political reasons.
How is the packaged food sector doing?
When I took over, the biggest stumbling block was product approval. India had that old standard, where every product had to be approved. You had to get the lassi approved, then the salted lassi approved, then the one with sugar. If you add mango, again an approval.
There were lakhs of products waiting for approval at the FSSAI and there were [only a] handful of people who had to approve it. So, for two years at a time, a product was awaiting approval. Innovation was at a dead end. The first thing [the] industry came and told me [was] that.
This came under the health ministry. So I worked with the health minister and we removed this product by product approval and harmonised it [to] the way it is done globally We did it by ingredients, applying global standards. It was a big breakthrough [and] business started gushing in after that.
In a country where people prefer to cook and eat, what will be the future of packaged food?
Packaged food is going to play an important role in a country like ours, where 50 to 60 per cent women are still anaemic and produce anaemic children. The way to address this is to give them fortified food. Healthy food and packaged food will have to go hand in hand.
We are all vitamin D deficient even if we are from well off families, so we need fortified milk. So healthy food and packaged food will have to go hand in hand where a person buying something understands how it is going to be useful for him and his family.
There is the question of affordability.
It will be. It has to be. If it is not, they will reach only a niche market and they will not get the numbers. The numbers are important for the business. The middle class is what everyone wants to capture because that is where the numbers are. If we are [only] looking at the expensive stuff, the percentage of buyers will be very small. So they will be affordable.
As it [is], the companies that have entered have packaged and priced it in such a way that it is affordable. That is how they have been successful. [The aim is] cheap, affordable, healthy and hygienic packaged food for our consumers.
How about product Innovation?
There is a lot that big companies are doing. Even new entrepreneurs have started doing [it]. Which is why you [can] see on a flight [now], [that] you [can] just add hot water to poha and have it piping hot [and] ready to eat.
These are all innovations that were not there five-to-seven years ago. So there are lots of innovations happening in this sector, by Indian and foreign companies. But, R&D requires a lot of money, time and effort. Multinationals fund R&D, but the concept of government funding R&D is not there.
I have a very small percentage of my budget for this because my focus is [on] infrastructure [that can] stop the wastage of the small farmer before I [can] start doing research
Small agro-processing units are always starved of credit
We are contemplating a non-banking financial institution under the Food Processing Industries ministry because banks don't fund.
A lot of the projects need bank loans, and the banks say no. So I spoke to many private funding agencies abroad and here, and they were very excited about the opportunities in India, especially after WFI. Funds are ready to come in with equity from our side.
It is lying at the cabinet stage — it has been lying there for a while, and I am waiting for that to get passed. If it comes through, I can immediately raise Rs 2000 crores and scale it up to 20,000 crores [within] the next three to four years. This will be used to finance the food processing industry, acting as viable gap funding.
The shareholding of our ministry will be very small. The rest will be run by a private international firm to make it profitable. In [a] professional way, it is not going to be a Sarkari bank kind of a thing. It is all within the RBI framework.
How about India's export of packaged food?
If we opened up foreign direct investment (FDI) of multi-brand retail of food manufactured and made in India, [then] the commerce ministry's new agriculture policy will play a big role in exports. If all the surplus products and farmers cannot go looking to export, the government will go to various countries and find the importers from there and then connect them.
It is our job to have it packaged according to their specs, labelling it. If potatoes have to be exported to a particular place, the farmer puts up his washing, grading, processing [and] packaging to their specifications, and exports [it].
India definitely has the capacity to be the world food factory, which is what I am aiming at.
By when?
Our infrastructure was only ten per cent when I took over… Now it may be two per cent higher. We have a long way to go. The budget was doubled to Rs 1400 crores when the ministry was separated from the agriculture ministry. So the continued focus of the government has to be there in the budget.
I can multiply only what I get. I can create a ripple effect. But the more you put in the more ripple you get, it is as simple as that.