Why PM’s visit to Japan is crucial: Exploring food value chains and agricultural trade

As global population is expected to reach 9 billion by 2050, food needs would require a doubling of agricultural production. The need of the hour is to meet the rising demand, increase productivity, lower costs, use fewer resources such as energy, water and pesticides, and improve product quality and availability. Several companies in agri-tech and food processing technology businesses are today offering technological solutions for meeting industry demands and to provide solutions that the world is faced with.
Current visit of India’s PM to Japan is strongly banking on food processing and food value chains sector which is going to bolster both the economy on mutual basis. As India is an emerging economy and a net food exporting country as well, it is indispensable for India to generate value addition as much as possible so as to escalate its exports.
India’s food ecosystem offers huge opportunities for investments with stimulating growth in the food retail sector, favorable economic policies and attractive fiscal incentives. The Government of India through the Ministry of Food Processing Industries (MoFPI) is also taking all necessary steps to boost investments in the food processing industry. The government has sanctioned 42 Mega Food Parks (MFPs) to be set up in the country under the Mega Food Park Scheme. Currently, 12 Mega Food Parks have become functional.
Food processing has an important role to play in linking Indian farmers to consumers in the domestic and international markets. The Ministry of Food Processing Industries (MoFPI) is making all efforts to encourage investments across the value chain. The industry engages approximately 1.77 mn people in around 38.6 thousand registered units with fixed capital of $29.7 bn and aggregate output of around $144.6 bn. Major industries constituting the food processing industry are grains, sugar, edible oils, beverages and dairy products.
Food processing industry in India has two major sub-segments namely food and grocery retail (92%) and the foodservice market (8%). Major food categories such as dry food grocery, dairy products, fresh produce, perishables, and spices have a share of 34.7%, 16%, 15.6%, 8% and 6% respectively in the food processing industry.
On the other hand, Japan is a saturated market. Its food processing sector does 60 per cent of its business outside Japan. But only 11 per cent of this is with India. There are only 12 Japanese companies operating in India. Japanese companies are flush with funds and are looking at investing in India. The Japanese are not looking at India as just a large market but also as a manufacturing hub. India is looking to be a sourcing destination for seafood, cashew, sesame and Darjeeling tea. It is also keen on exploring the feasibility of mergers and acquisitions of Indian companies in the food and agriculture value chain, and importing Japanese technology.
Japan’s reliance on food imports is a further factor of concern, currently estimated at 60%, prompting recent government targets for boosting domestic production to 55% by 2050. Agricultural production at present is valued at around 1 trillion yen of which the government aims to increase it to 10 trillion yen by 2020, raising food self-sufficiency as a major agricultural policy.
Japan can build on the benefits that it receives from the rest of the world in the form of enhanced food security by sharing its capabilities in areas where Japan plays a leading role on the world stage, such as in desalinization technology. In Japan, food security initiatives need to encompass the entire value chain because there are potential problems throughout. Driving exports to Japan and securing new technology partners for manufactures and suppliers should be the main priorities for the Indian food processing sector
India’s PM’s visit to Japan aims at developing India’s food processing industry with involvement of relevant stakeholders such as local governments, private companies, SMEs and trade promotion bodies.
Primary objective is to promote development of agricultural value chain and fisheries, including aquaculture, by improving the investment environment for Japanese companies, facilitate investment of Japanese companies in food value chain in the state of Maharashtra and to facilitate investment of Japanese companies in food value chain in the state of Uttar Pradesh.
Let us hope Prime Minister Narendra Modi’s visit to Japan will serve as an important milestone towards developing India’s requirements related to food value chains and agricultural trade and the steps taken will lead to concrete measures to feed a greater percentage of world population.