But it defies understanding in the context of growing environmental concern in the country, as to why the draft policy does not mention even the most common environmental concerns in this industry are water consumption and wastewater discharge, chemicals used in processing and cleaning, packaging reduction and disposal, and solid waste such as food scraps and refuse.
Since the problems are not taken cognizance of the policy obviously does not deem it fit to initiate solutions such as water conservation, use of less hazardous chemicals, energy efficiency, recycling of waste materials etc.
Strangely, incorporating pollution prevention and clean technologies into processing operations has not been considered. "Clean technologies" refers to "manufacturing processes or product technologies that reduce pollution or waste, energy use, or material use in comparison to the technologies that they replace."
The food-processing industry is supposed to be sensitive to the concerns about the health and safety of the consumer but the draft policy does not say as how it would put its sensitiveness in practice. The draft policy fails in its purpose in the absence of its response for human health and environmental pollution issues.
With regard to handling of wastewater the foremost concerns are biochemical oxygen demand (BOD); total suspended solids (TSS); excessive nutrient loading, namely nitrogen and phosphorus compounds; pathogenic organisms, which are a result of animal processing; and residual chlorine and pesticide levels.
As far as solid waste is concerned it includes both organic and packaging waste. Organic waste emerges from processing operations. Inorganic waste includes excessive packaging items like plastic, glass, and metal.
In the West organic wastes are finding ever-increasing markets for resale but in India it gets mixed with inorganic waste in the absence of the practice of source segregation.
In US and Europe, companies are slowly switching to more biodegradable and recyclable products for packaging. Excessive packaging has been reduced and recyclable products such as aluminum, glass, and high-density polyethylene are being used where applicable.
Surprisingly, none of these positive developments world over merit mention in the draft Food Processing Policy.
Although Fermentation industry including manufacture of yeast, beer etc, Sugar (excluding Khandsari), Milk Processing and dairy products (Integrated project), Parboiled rice mills, Slaughter houses and meat processing units, Vegetable oils including solvent extracted oils, hydo-generated oils and others are part of the Food processing industry is deemed under RED category by Ministry of Environment & Forests, Government of India as heavily polluting, the draft policy remains oblivious of it.
The policy draft has been put up on the website of Food Processing Ministry
http://www.mofpi.nic.in/fpipolicy.htm for comments and suggestions from the public till January 30 next year. The comments can be sent to Subodh Kant Sahay, Minister of Food Processing Industries at 
mofpi-policy@nic.in One can read the draft policy given below
Draft
03-01-2005
Food Processing Policy
2005
I. Preamble
1.1 The farming sector has come a long way since independence. From a country beset with shortages India has attained self sufficiency in food with sectoral surpluses emerging in production. With the growth of the economy a shift is also being seen in the food basket from consumption of cereals to a more varied and nutritious diet of fruit & vegetables, milk, fish, meat & poultry products. These changes have brought in their wake the imperatives of an emerging industry of Food Processing Industries.
1.2 India with arable land of 184 million hectares, produces annually 91 million tonnes of milk (highest in the world), 150 million of fruits & vegetables (second largest), 483 million livestock (largest), 210 million tonnes foodgrain (third largest), 6.2 million tonnes fish (7th largest) and is the fifth largest in egg production. Though yields and per capita consumption patterns are expected to improve, yet moving from subsistence levels of production to a marketable stage has brought in pockets of surpluses which has led to wastages of produce. Surpluses have led to localised marketing difficulties and at times a fall in prices with consequent impacts on farmer incomes. Inspite of surpluses and wastages our levels of processing has been low.
1.3 Conservative estimates put processing levels in the Fruits & Vegetables Sector at 2%, Meat & Poultry at 2%, Milk by way of modern dairies at 14%, Fish at 4%. Bulk meat de-boning is to the tune of 21%. Processing in the areas of foodgrains, oilseed, tea, coffee, etc. where raw products have perforce to be processed have had a tradition of being processed is high. Even in these products the demands of modern food processing sector are still emerging. Compared to the developed countries of the world we are far behind, unfortunately we lag behind even compared to countries like Philippines and China where value addition is 45% and 23% respectively as compared to our rate of 7% in food products.
1.4 The food processing sector though in the nascent stage constitutes 14% of manufacturing GDP and amounting to products value of Rs.2,80,000 crores. It employs 130 lakh persons and has the propensity to promote 2.4 times the indirect employment of its direct employment creation. Employment over value added is larger as compared to the manufacturing sector as a whole. Over the last decade or so food processing has grown at a rate of 7.1% per annum. The higher rate of growth as compared to the Agriculture growth rate is indicative of its low base, the increased availability of surpluses, changing life styles, tastes and higher disposable income with consumers. It is expected that the annual growth rate in the next five years shall be to the tune of 7.3% per annum.
1.5 The area of responsibility of the Ministry of Food Processing Industries encompasses grain milling, milk, meat, poultry, fish confectionary, bakery, convenience foods, and fruit & vegetable processing sectors, aerated drinks, beer & non-molasses based alcoholic drink.
These industries as a group have a turnover of 1,50,000 crores and have shown a higher rate of growth. They are expected to maintain this trend and grow at the rate of 7.3% per annum in the next five years. This policy is with regard to areas of responsibility of the Ministry.
1.6 With the advent of the WTO regime and the possibility of lowering of subsidies in the developed countries, our competitive advantages in food production and processing industry shall come to the fore. However, due to a variety of factors though world trade has moved more and more towards processed commodities, our export has performed unevenly with regard to such value added products.
II. Objectives & Goals
2.1 The stepped up growth of food processing should lead to the fulfilment of:
a) Higher farmer incomes and the providing of a larger as well stable market for farmer produce.
b) Reduction in wastage of farm produce.
c) Provision of nutritious, safe food and wider consumer choice.
d) Enhancing employment opportunities by way of direct and indirect employment.
2.2 With a view to achieve these objectives we should aim for doubling the food processing sector of in the next five years i.e. aim for a compound annual growth of nearly double of what was achieved in the last five years. The stepped up growth shall have major beneficial impacts in terms of the objectives for the food processing policy. Industry alongwith government and concerned institutions shall need to act in concert to achieve these goals.
III. Constraints & Strategies – Across Sectors
Affordability & Costs of Processed Food
3.1 In the developed countries processed food and fresh food prices are usually within a reasonable comparative range. At times processed foods are even cheaper than fresh food. In India, however due to a variety of factors processed foods prices are substantially higher than fresh food. Given the objectives which are achieved by processing there is an urgent need to take measures to reduce costs, and make processed food affordable.
3.2 Of late there has been a draw down of taxation for the perishable sector, alongwith Income Tax waivers for fruits & vegetables. Reduction/waive in excise has also been forthcoming. The whole perishable sector should be treated in a similar fashion, the losses to the exchequer shall be notional.
3.3 Cost of packaging is the other major constraint of this sector. Cost of packaging ranges anywhere from 10 to 64% of production costs. The high level of intermediation in the Indian food chain also pushes up costs. Efforts should be made to assist towards consolidation of the chain and the reduction of transaction costs in this regard, lack of infrastructure, post harvest losses, multiplicity of regulatory authorities also add to costs of the processed foods.
3.4 Some of the dimensions outlined above have a linkages, constraints, and remedies falling in other functional areas and shall be dealt with under respective groupings.
Processors, Farmers & Agri - varieties
3.5 Linked with the issue of fostering relationships between processors & farmers is the possibilities of varietal relevance and productivity increases. Agriculture often suffers from varietal constraints. Oranges in Nagpur and Mangoes in Malihabad (UP) are instances where though there are gluts at harvest time processing has not taken off due to want of processable varieties.
3.6 The amendment/modification of the Agriculture Produce Marketing Commodities Act would facilitate the reduction in costs, as well as, allow the fostering of a beneficial relationship between the relevant players. Contract farming is an intervention which appears to have helped the growth of the processing industry as well farmer incomes. Care shall however need to be exercised to strike at the correct balance between the farmer and processors rights and obligations.
3.7 The traditional extension machinery has at times being unable to deliver on varied demands and requirements of farmers. Some states have fostered public-private relationships in this regard. Others have partnered with company led initiatives like e-choupal and the encouragement of contract farming. It shall be the endeavour of the policy to bring forth the best practises being adopted before the States for them to exercise appropriate choices in the field of extension and linkage with processors and research institutions.
Supply chain & post harvest issues
3.8 A characteristic of the Indian food chain is that it is a very long and fragmented chain, which adds to cost, and at times a disconnect between producers and consumers. The chain today leads up to aggregation at the mandi level and then disaggregation to the consumer. Some issues could be addressed by contract farming as already discussed. Other issues specially for fresh produce would be better addressed if organisations large food retailers or markets come into being which procure directly from farmers or at best villages and make it directly available to consumers.
3.9 Besides the observed fragmentation of the supply chain we need to improve on post harvest handling, cleaning, grading, packaging and storage. Storage protocols need to be developed for the varied agri produce available. Presently work has been concentrated on first a few crops like wheat, rice, grapes, mangoes, citrus and capsicum.
Infrastructure Support
3.10 Infrastructure for this sector is lacking. Deficiencies exist for grading and packing besides pre-cooling at farm site which could feed into a formalised cold chain. The cold storage capacity today caters to less than 10% of the produce, this too is of rudimentary nature with over 80% designed only to handle potatoes. A paucity of chilling infrastructure for milk and a lack of modern abattoirs for the meat processing sector is seen. Fish processing more specifically for exports requires a major step up in infrastructure availability. Physical marketing and warehousing infrastructure also needs to be upgraded.
3.11 India has limited Controlled Atmosphere Storage facilities, technologies, protocols and machinery is chiefly imported. While no attempt is suggested to reinvent the wheel, we should develop expertise to assess and modify and if necessary upgrade manufacture capabilities according to our specific requirements.
3.12 These areas need support and new paradigms of private-public partnership. Government subsidy schemes, partnership with banks, creation of models for JVs, SPVs for implementation as well as dedicated infrastructure financing institutions are required to give this area the requisite push.
3.13 Besides the hard production infrastructure gaps mentioned in the para above gaps exist in the Lab. Research and training infrastructure which have already been mentioned in respective functional areas.
Financing Issues
3.14 Within the priority sector lending target of 40% the banks are mandated to lend 18% to direct and indirect Agricultural activities. Food Processing finds place within a further sub-category of indirect lending of 4.5%. This sub-category is usually oversubscribed by banks as even agriculture inputs find are a part of this sub-category. Directed lending has its own limitations in expanding credit to this sector. Still removing conditionalties of caps on financing, allowing advances for crop purchases to be considered as part of this lending shall give a signal and assist this sector in improving its financial availability and muscle.
3.15 Agricultural produce is seasonal in nature and thus subject to gluts more specifically in the perishable sector. To mitigate this uneven production we have previously discussed storage and infrastructural options. A difficulty in this endeavour are the finance needs of the farmers, processors. Warehousing receipts should therefore be made negotiable instruments. A system of accreditation of warehouses would need to be put in place so that receipts gain value and are tradeable. Issues coming in the way of this mechanism should be resolved.
3.16 Prices of agricultural produce often fluctuate leading to confusing market signals to farmers and upsetting cost estimates of processors. To make commodity markets more stable the future markets need to be deepened. Banks, Mutual Funds and FIIs should be allowed futures participation and trading Commodity based derivative funds and trades should also be allowed.
3.17 Liberal funding for infrastructure development under RIDF would also provide the much need funds to give a leg up to this sector. States could then be well advised to go into Joint Ventures to build and operate such infrastructure.
3.18 Commercial banks have substantial flexibility in lending. However practises on risk assessment vary a great deal which leads to an uneven performance. Best practices of banks should be studied and disseminated to enhance credit flow to the sector.
3.19 New and innovative methods should be identified to enable structured term lending for infrastructure development.
Research Development & HRD
3.20 Institutions need to engage both fundamental and applied research and keep abreast of global demands. Based on preferences of Indian consumers they need to address parameters of physical, chemical, taste, flavour & spoilage. Research needs to be further charaterised by offering scale-able models. Institutions should also be charged with patenting indigenous technology as well as technology they generate. An effort therefore, to begin with, needs to be undertaken to network the present institutions and establish a database on the present availability of technologies, patents and capabilities which shall serve as the base for further work in this field.
3.21 India has a very wide range of eating habits and food products. Such products and processes need to be documented where necessary improved upon and patented. R&D on ethnic foods shall not only address regional needs but open up a market amongst the large Indian diaspora.
3.22 Looking at industry and users’ demands it would appear that steps need to be taken to further nurture high quality institutions in this field. An apex institutions could be established which would inter alia provide for world class graduates and research programmes; carry out cutting edge research; provide for a framework for a constantly updated curricula to sister institutions, assist and provide a linkage to regional institutions in their activities.
3.23 A special area of concern is the packaging sector. High quality packaging today requires costly machinery as well as costly materials. Research on packaging needs to be stepped up to arrive at cost-effective solutions.
Food Safety & Hygiene
3.24 The Indian emphasis on fresh food consumption is also linked to the quality perception of processed foods. Processed foods by definition imply a certain shelf life before consumption. Unless we are able to assure the consumer that this storage has not led to a deterioration in food quality the consumer would shun processed foods. Consumers therefore look to safety in certifications and brands, where they do not have an intimate knowledge of the product or process. Certifying authorities therefore need to be vigilant in enforcing standards. Quality enforcement staff should also be fully trained on HACCP, GMP and GHP requirements and measures. A well equipped and certified lab. infrastructure needs to be put in place commensurate with a hierarchy of needs at the regional state and divisional/district level as the need be.
3.25 Institutions need to develop expertise on standards and CODEX issues. Efforts should be made to harmonise national standards with CODEX standards so that our populace is assured of good quality product. CODEX should form the starting point for making risk assessment and analysis to help arrive at science based standards, relevant to Indian conditions.
Exports
3.26 Processed food exports account for just 1% of trade in this sector have grown at an average rate of 7% per annum for the last five years accounting for about 70% of total agricultural exports. Issues of quality standardisation and certification are accentuated in this field. The rate of growth needs to be doubled over the next five years. Export related infrastructure agri produce specially at sea and airports needs to be strengthened. Brand building, market intelligence and a continuous watch on areas of emerging competitiveness needs to be maintained to enhance exports.
Legal Framework
3.27 Issues of quality and standards have already been touched upon. The legal framework governing the sector is in need of change. Nine ministries and over thirteen central orders lay down the law, rules & regulations, just at the Union level. States have their various control orders as well. The organisations responsible for these regulations are often poorly staffed, trained and have diverse objectives and orientation. Consequently industry is faced with an inspector raj. Recognising this issue the Union Government has set up a Group of Ministers to consider an Integrated Food Law. This effort would go a long way to bring in a law which balances the imperatives of food safety, consumer choice, industry representation and compliance.
3.28 Processing industry is by nature seasonal. Assets remain idle over a prolonged period of time. Karnataka in recognition of this character has given it a status which exempts it to an extent from labour, and other regulations. Efforts therefore need to be make to see how relief can be extended given its seasonal nature.
3.29 Scale of industry is determined by economic imperatives of markets and even without reservation of the overwhelming number of items over 80% of this industry is in the small scale sector. There has been no evidence of the collapse of industry or unemployment in the items dereserved over the last decade or so. While there has been progressive dereservation of processed foods six categories still remain reserved for production in the small scale sector. A measured dereservation of the residual categories needs to be followed.
3.30 Contract farming has been discussed in the previous sections as one of the measures which would facilitate processing. Some states have already provided for this as an alternative method of procurement. A relook of the APMC Acts in the states is urgently required to allow choices and alternative modes of sourcing to entrepreneurs.
Support Structure
3.31 Though the share of Agriculture GDP has reduced from 62% to 22% from 1954 to 2004 yet over 66% of our population draw sustenance from this sector and, of course the sector is of concern to consumers encompassing the whole population. The large canvas of the sector and at times crisis in particular sub-sectors has spawned a large number of interventions. This has led to a large proliferation of Acts, rules and regulations which has already been discussed earlier. Alongwith the regulations Government over a period of time has created a very large number of promotional organisations. Separate commodity boards of Tea, Coffee, Cashew, Coir, etc. besides, APEDA, MPEDA, EIC, NHB, CFTRI, DFRL, IIP, D.M.I., Ministry of Agriculture and Ministry of Food Processing Industries to name a few exist. Just as it is time to consolidate the legal framework it is also time to consolidate the promotional framework to obtain optimum results both at the Union as well as the State level.
IV. Constraints & Strategies – Sectoral Issue
4.1 While most of the issues are cross sectoral in nature some sectors do have specific issues to be addressed. In the fruit and vegetable sector to enhance exports a programme to lift quarantine measures inposed by certain countries should be pursued. For certain fruits or their pre-shipment treatment needs to be taken in hand. Issues of organic produce and awareness of systems in place needs to be disseminated.
4.2 In the dairy sector R&D an indigenous products needs greater effort. The milk procurement and testing has to devise means to go beyond fat content testing at collection points to issues of SNF, bacterial count, somatic cell count and residues.
4.3 In the meat & poultry sector one would need to concentrate on disease free zones, partnership structures for abattoirs and the removal of deficiencies in the feed supply chain.
4.4 The fishery sector and more specifically the marine sector has vast possibilities. Processing infrastructure for sea catch needs to be strengthened.
4.5 In the foodgrain sector we would need to look at storage and bulk handling issues for the domestic and export sector and look at means to export value added products instead of just grains.
V. Special Category States
5.1 Special category states are by and large less developed in economic terms. Often characterised by a weak industrial base and chiefly agrarian, food processing offers possibilities of development in their case. Strategies should be tailored to their specific needs, so as to reap benefits through food processing initiatives.
VI. Policy Review
6.1 The pace of scientific, social and economic change has accelerated. Policies need to address these changes to guard against threats as well as take advantage of opportunities. To ensure that policy remains in tune with its times, a review every five years in consultation with concerned stakeholders should be undertaken.
http://www.mofpi.nic.in/fpipolicy.htm