financing options for the food processing sector

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1 Investment Environment & Opportunities in Food Processing Compendium Odisha of financing options for the food processing sector Knowledge Partner Ministry of Food Processing Industries Government of India National Event Partner

2 Table of contents State Introduction 2 Why Odisha 2 Raw Material Base 3 Production Clusters 6 Agricultural Marketing 8 Processing Clusters 9 Infrastructure 12 State Government Initiatives 15 Snapshot of Investable Projects 18 Contact Us 22

3 2 State Introduction Odisha is located on the eastern coast of the Indian Peninsula by the Bay of Bengal. The state's economy witnessed high growth rates between and , with gross state domestic product (GSDP) expanding at a compound annual growth rate (CAGR) of %. The state leads in iron, steel, ferroalloy and aluminum production and has a strong base for coal based power generation. Odisha is primarily an agrarian economy having nearly 30% contribution to the Net State Domestic product (NSDP) with over 70% percent of the work force engaged in this sector. The cropped area is about 8.7 Million hectares out of which 1.9 Million hectares are irrigated. Climate and soil play a vital role in Odisha's agriculture economy. Odisha - key highlights State capital Bhubaneswar Geographical area 1 155,820 Km² Population Million (Census 2011) Gross state domestic INR BIllion (USD product (GSDP) 3 Billion) in at constant (at current price, base year ) price, base year Per capita income 4 (Measured as Per Capita NSDP at USD 867 current prices for ) FDI inflows 5 INR Billion (USD 416 million)- FY00-FY17 Total road length (kms) Rail length (route kms) km Ports 8 3 Odisha Bhubaneswar Airports 9 1 Why Odisha 1 Odisha is one of the leading vegetables, plantation crops and rice producing States of the country. 2 Odisha is among the top three cashew producing states of India 3 With a coast line of 480 km, Odisha is 4 th in India in shrimp production. 4 Government of Odisha plans to augment the growth of food processing from 0.7% to 10% by 2017 and 25% by 2025 opening up large scale investment opportunities

4 3 Raw material base (1/3) Odisha has over 40% of its total land area under cultivation. This is comparatively more in the coastal districts of Odisha i.e. Balasore, Bhadrak, Cuttack, Ganjam, Jajpur, Jagatasinghpur, Kendrapara, Khurda, Nayagarh, Puri etc. The total cultivable land exploited for cropping is about 40% of the total geographical area and the utilization is comparatively more in the coastal districts. Under the National Food Security Mission- Commercial crops (NFSM CC), it is aimed that production and productivity of sugarcane would be enhanced through modern farming techniques as intercropping, and other initiatives. Besides that Odisha is a leading producer of Bengal Quince, Pumpkin, Sweet Potato and Niger Seed in India. Other prominent produces of Odisha are Paddy, Black gram, Castor Seeds and Jute. Odisha also has a strong and upcoming fisheries sector, the state is among the highest fish producing states. SNAPSHOT OF LAND UNDER CULTIVATION Arable land Net sown area 5604 Total area sown 9071 ( , 000 hectare) Odisha has ten agro-climatic zones 10 beneficial for cultivation of a multitude of crops, vegetables and fruits round the year. Based on soil characterization, rainfall and temperature, ten agro climatic zones in Odisha have been identified as under: North Western Plateau District: Sundargarh, Deogarh, Sambalpur & Jharsuguda North Central Plateau District: Mayurbhanj, Keonjhar North Eastern Coastal Plain District: Balasore, Bhadrak, Jajpur Eastern Ghat High Land Districts: Koraput, Nabrangpur South Eastern Ghat Districts: Malkangiri, Part of Keonjhar North Eastern Ghat Districts: Phulbani, Rayagada, Gajapati, Ganjam Western Undulating Zone Districts: Kalahandi & Nuapada Mid Central Table Land Districts: Angul, Dhenkanal Western Central Table Land Districts: Bargarh, Bolangir, Boudh, Sonepur East & South Eastern Coastal Plain Districts: Kendrapara, Khurda, Jagatsinghpur, Cuttack, Puri, Nayagarh

5 4 Raw material base (2/3) Major strength of Odisha s food processing industry lies in the following: Food Grains: Paddy, Finger Millets, Maize Fruits- Bengal quince, Jujube, Jackfruit, Mango, Pineapple, Litchi Pulses- Black gram, Green Gram Plantation- Cashew, Coconut Oilseeds- Castor seed, Niger Seed, Groundnut Others- Tamarind Food Grains: Key production highlights ( ) Total production of Lakh Million Tonnes of food grains o o o Paddy Lakh million Tonnes Millet 8 Lakh million Tonnes Pulses 10 Lakh Tonnes Horticulture products: Key production highlights ( ) Total production of 11.7 Million Tonnes of horticulture products o o o Fruits Lakh million tonnes Vegetables Lakh million tonnes Plantation 3.4 Lakh Million tonnes

6 5 Raw material base (3/3) Livestock & Fisheries: Key production highlights 11 ( ) Odisha s contribution in the National Marine Fish production is five percent in the year Odisha is also responsible for two percent of the country s meat and egg production. The poultry industry in Odisha is an organized industry and part of the agriculture sector. CROPS ( 000 tonnes) Paddy 5878 Pulses 1000 Maize Oil Seeds FRUITS ( 000 tonnes) Mango Jackfruit Bengal quince 48.6 Brinjal VEGETABLES Cabbage ( 000 tonnes) Pumpkin 460 PLANTATION ( 000 tonnes) Coconut 228 Cashew 90.83

7 6 Production Clusters The major production clusters 12 of Odisha are given below: Brinjal Kendujhar, Balangir, Mayurbhanj, Ganjam, Sundargarh Tomato Kendujhar, Balangir, Sundargarh,Sambalpur Cabbage Kendujhar, Balangir, Mayurbhanj, Ganjam, Sundargarh Cauliflower Kendujhar, Mayurbhanj, Ganjam, Sundargarh Onion Balangir, Nuapada, Angul, Boudh,Kalahandi Sweet Potato Mayurbhanj, Ganjam, Keonjhar,Malkangiri,Dhenkanal Pumpkin Okra Balangir, Mayurbhanj, Ganjam,Keonjhar,Sundargarh,Cut tack Cuttack,Sonepur,Balangir,Balasor e Pulses Cuttack, Puri, Kalahandi, Koraput Dhenkanal, Balangir, Rayagada, Nauparha, Sambalpur Paddy Plantation Crops Puri, Ganjam, Cuttack, Khorda, Koraput,Dhenkanal,Malkangiri Oil Seeds Bargarh, Balangir, Kalahandi, Mayurbhanj, Nabarangpur Koraput, Mayurbhanj Geographical Indication for Agricultural Products in Odisha: Ganjam Kewda Rooh Ganjam Kewda Flower Kandhamal Turmeric Koraput Arometic Rice

8 7 Production Clusters

9 8 Agriculture marketing Odisha has the following marketing facilities 13 in the state: Fisheries: Over 0.16 million active marine fisher man engaged in marine fishing which has a production potential of 0.16 million tonnes. Agri-Export Zones: Kandhamal Agri Export zone has been identified by the state government for the export of Turmeric There are 66 regulated market committees and around 600 markets and sub-market yards in the state. 10 markets have been integrated with e-nam 126 cold storage and 34 fish processing units with capacity of over 0.27 million MT 750 small and large warehouses with a capacity of 0.37 million MT 41828MT is the total seafood export during with a value of INR 2205 cr (USD 324 million) 66 Market Fish production employs over 0.16 Million people Agricultural markets in Odisha 126 cold storage and fish processing units 10 markets integrated to e- NAM 1 Agri Export Zones 750 Warehouses

10 9 Processing Clusters (1/2) Mango Based Products Balangir, Kendujhar, Sundergarh, Dhenkanal,Koraput,Sambalpur, Mayurbhanj,Rayagada Banana Products Balangir, Cuttack, Jajpur, Sundergarh, Sonepur, Rice Based Products Bhadrak, Bargarh, Balangir, Dhenkanal, Koraput, Fish & Seafood Cuttack, Ganjam, Jajpur, Khorda, Puri, Balasore Milk Processing Cuttack, Dhenkanal, Ganjam Tomato Based Products Kendujhar, Mayurbhanj, Sundargarh Sweet Potato Processing Ganjam, Dhenkanal, Kendujhar Processed Bengal Quince Mayurbhanj, Dhenkanal, Raygada Edible Oil Khorda, Kalahandi, Balasore, Bargarh, Sambalpur Sugarcane Processing Ganjam, Rayagada, Bargarh Famous Ethnic Foods of Odisha: Chenna Poda: The quintessential burnt cottage cheese dessert of Odisha. Rassogulla: A syrupy dessert made from cottage cheese is a ball shaped dumpling dipped in sugary syrup and often in semolina. The village Pahala, on the Cuttack-Bhubaneshwar road is known as the The Rasogulla District of Odisha as it is home to a large number of shops selling fresh Rasogullas. Bara: Crispy from the outside, soft on the inside, this popular snack is prepared from black-gram dal along with rice. Macha Ghanta: Curry made from fried fish head, onions, potatoes and spices. Puri Khaja : As legendary as the god himself

11 10 Processing Clusters (2/2) Seafood production in Odisha 21 : Odisha has a long coastline of 480 km with continental shift area of 24,000 sq kms along the East Coast of India. It is one of the largest seafood producing states of India, major supplier of seafood to the hinterland states of Jharkhand, Chhattisgarh, West Bengal, etc. Marine fish constitutes over 40% of the total fish production of 467,076 MT in the State It is a Major exporter to EU and Far East countries. Odisha is host to a large number of food processing companies and the sector is in its growth stage in the state. An indicative of key companies and their district of presence in the state is given below. Fruit & Fruit based products Parle Agro, Khorda Hindustan Coca Cola Beverages Pvt. Ltd., Bhubaneshwar Nayak Foods Agrotech Private Limited, Bhadrak Ready to Eat Products Britannia Industries Limited, Khorda Indo Nissin Foods Pvt. Ltd, Khorda Om Oil & Flour Mills Ltd., Cuttack Oil & Oilseed Processing Balgopal Food Products Pvt Ltd, argarh SNM Business Pvt. Ltd, Balasore Seafood & Seafood Magnum Sea Foods Ltd., Khorda Blue Wren Seafoods Ltd, Bhubaneshwar Falcon Marine Exports Ltd, Bhubaneshwar

12 11 Pg Processing clusters Clusters

13 12 Infrastructure (1/2) The status of key physical and agricultural infrastructure in Odisha is as follows: Parameter Inland container depots(icds) 14 Status One operational Rail ICDs with CFSs in Balasore Existing Industrial Areas/ SEZs Industrial Areas One Agri-Export Zone 126 Cold Storage and Fish Units Two Mega food Parks, One Seafood Park and One Rice Technology Park Installed power 16 (including allocated shares in Joint and Central Sector Utilities as on 31 Mar 2017) Thermal: MW Hydro(Renewable): MW RES(MNRE): MW Utilities Electricity cost 17 Water Cost 18 Industrial Rate INR 5.4 Unit 14.6 per cubic metre

14 13 Infrastructure (2/2) A number of industrial areas and food parks are available in the state for investors keen on setting up food processing units in the state. The key food parks in the state include: S. No. Industrial Park Location Type (Multi/ single Mega Food Park product), ETC. Total Area (Acre) Total Land Available 1 MITS Mega Food Park Ltd Rayagadha Multi products Mega Food Park (IDCO) Khorda Multi products Seafood Park Deras Seafood Industrial Park 1. Rice Technology Park Bhadrak Engineering, Food Processing Note: All the above mentioned units have Odisha Industrial Infrastructure Development Corporation (IDCO) as the nodal agency. The point of contact Shri Sanjay Kumar Singh, IAS, CMD; md@idco.in Cold Chains: The objective of the Scheme of Cold Chain, Value Addition and Preservation Infrastructure is to provide integrated cold chain and preservation infrastructure facilities, without any break, from the farm gate to the consumer. Below is the list of cold chains present in the state: S.no Project Type of Product District 1 Om Oil & Flour Mills Ltd. Ready to eat products Cuttack 2 Falcon Marine Exports Limited Seafood Balasore

15 14 Infrastructure Airport Mega Food Park/ Food Park Cold Chain

16 15 State government initiatives (1/2) Investor Facilitation Initiatives Single Window Clearance System: Single Window Clearance Authority has been formed under Odisha Industries (Facilitation) Act, 2004 and Amended Rules, 2015 at District and State level. Investment Facilitation Cell: This is one of the key reforms undertaken by the state government. This cell has been formed to facilitate and guide the investors at the state and the district level. Central Inspection Framework: The state has undertaken several inspection related reforms, primary one being the setting up of a Central Inspection Framework that aims to simplify business regulations and bring in transparency and accountability in inspections. E-Biz Online Portal: An online portal of the Government of Odisha has been created as a single point interaction as a convenient and efficient online tool of all G2B services for the business community. Industrial Land Banks: GOI PLUS (Govt. Odisha Industrial Portal for Land use and Services) System has been developed to display real time information with regards to industrial land in the State. Automated Post Allotment Application: The state has implemented the Automated Post Allotment Application (APAA) for smooth management of existing MSME business units associated with IDCO.

17 16 State government initiatives (2/2) Key Highlight: Odisha Food Processing Policy Name of Policy Odisha Food Processing Policy 2016 Focus Sector Nodal Department Capital Subsidy Interest Rebate/Subsidy Quality Certification Skill Development / Human Resource Development Employment Generation related incentives Technology up-gradation and R&D related Incentives Agro Industries And Food Processing MSME Department, Government of Odisha New and existing Enterprise undertaking expansion/modernization/diversification shall be provided capital investment subsidy of 25% of the project cost (excluding the cost of land) subject to limit of INR 20 Million. For Women entrepreneurs or enterprise belonging to SC/ST the subsidy shall be 33% of the project cost subject to limit of INR 30 Million For State of the art NABL accredited Food testing laboratories to be set up in PPP mode at locations other than Cuttack, Berhampur, and Bolangir will get Capital subsidy of 50% of Capital investment made in plant & Machinery with cap of INR 40 million For modernization of Meat shop CIS would be as follows: For general areas, 35% of the cost of Machinery/Equipment and Civil works up to INR 0.5 Million For Industrially backward districts including KBK, 50% of the cost of Machinery/equipment and civil works up to INR 0.5 Million 5% per annum back ended interest subsidy on working capital loan for first five years, from commencement of operations for MSME. It will be subject to a limit of INR 0.5 Million per year for five years Interest subsidy will be available on funds borrowed from public sector banks/osfc and its not available on term loan Government will reimburse up to 50% of the cost of certification such as HACCP, GMP, TQM, ISO 9000, Agmark, FPO subject to ceiling of INR 0.2 Million One time capital 50% of the cost up to INR Ten million will be provided to recognized University / Institution in the state for creation of infrastructure facilities for running a recognized Degree / Diploma Course in Food Processing Technology Financial assistance up to INR 0.3 million per ESDP (of 25 to 30 trainees) will be provided to Government ITIs / Government Polytechnics / IEDO / OUAT for conducting a 30 days Certificate Programme on Food Processing Institute of Entrepreneurship development, Odisha shall be suitably equipped to take up the Entrepreneurship development programme in line with MoFPI's entrepreneurship development Support cell shall support entrepreneurs by providing knowledge on incentives under various policies and programmes of central and state government. Bureau of Indian standard shall be knowledge of partner of said cell. Implementing agency shall take necessary support from Institutions such as OUAT, NABARD, and CFTRI. Agriculture education and research institutes and private institution including skill development agencies shall be encouraged to design specific training programs for developing skills in the food processing sector. Implementing agency shall provide financial support to private skill development agencies of INR 5000 per person for courses approved by Directorate of technical education and training, Odisha on vocational skills in food processing sector

18 17 Assistance of 50% of the cost of Machinery and Technical Civil work subject to a ceiling of INR 0.5 Million and 75% in ITDP areas Setting up of Food Park Others Website link of policy document State Food Parks at strategic locations namely, Deogarh, Bhadrak, Bargarh, Nawrangpur (Maize Park), Sambalpur, Ganjam, Bolangir, Kandhamal and Kalahandi over a minimum land area of 25 acres each shall be promoted by State Government through IDCO/OSIC/private agencies Organizing Seminar/Workshops: Assistance up to a ceiling of INR 0.2 Million per event organised by ITIs / IEDO / OUAT / APICOL / DEP&M / IIP / State Level Industry Associations (subject to prior approval of Government) Domestic study tour/exposure Visit: 50% of expenditure for a maximum of Two batches (10-25 persons per batch) per annum with a financial ceiling of INR 0.2 Million per batch shall be provided. In case of Govt. representatives, TA, DA, etc. shall be admissible as per OTA Rules. Prior approval of the Government shall be obtained Conducting Studies / Surveys / Feasibility Report: Assistance up to 50% of the cost, subject to a maximum of INR 0.4 Million shall be provided. When the Govt. / Govt. Organisations commissions the study / survey, there will be no financial ceiling. Prior approval of the Government shall be obtained Financial assistance in the form of credit linked back ended 35% of the cost of standalone New Reefer Vehicle(s) / Mobile pre-cooling van(s) up to a maximum of INR 2.5 Million shall be provided for carrying & transporting both Horticultural & non-horticultural produce

19 18 Snapshot of potential investable projects Odisha offers diverse set of investment opportunities in the food processing sector. An indicative list of potential projects for investments is presented below: Project name Establishment of Fruit Processing Unit Establishment of Baker s Yeast Unit Development of IQF for fish & Shrimp Rice Technology Park at Bhadrak Processable Products/ Infrastructure Pulp, squash/ juices, jam & jellies, pickles, etc. Value Proposition The project is essential as the state government is trying to make use of the avaiability of raw material and need for controlling wastage through processing. As the production increases there will be need for processing facilities and FPU is one of the basic processes required. Molasses The manufacturing unit can focus on production, processing, marketing, export of Yeasts. With the increasing demand for bakery products, demand for yeasts is also increasing. Requirement of raw material molasses (by product of sugar mills) and the state is abundant in raw material. Fish & Shrimp Rice based food processing industry The project is essential as the state government is trying to create new infrastructure and projects for increasing the fish and shrimp production. As the production increases there will be need for processing facilities and IQF is one of the basic processes required. With the state being a leading producer of paddy, this project would help investors with a number of opportunities and applications of paddy as food and for industrial purposes. Seafood Park at Deras Fish & Shrimp The set up is for : Pre-processing units; Packaged food; Raw processing; Hatcheries; Freezing systems ; Warehousing and cold storage MITS Food Park at Rayagada Development of Mega and Medium Food Park - Ganjam Development of Centre of Excellence (CoE) Commodity Value Chain based Cluster Development Multiple Agricultural Products Dairy Products To be developed for research techniwues to improve agriculture Multiple Agricultural Commodities Primary purpose: Pre-processing units; Packaged food; Raw processing; Freezing systems; Warehousing and cold storage. Creation of infrastructure, Operation and maintenance of plants for dairy products. Five CoEs will be developed in PPP Mode. Development of the built infrastructure will be taken up by Private Developer. Dhenkanal- mangoes, maize, sunflowers, vegetables, cashews and mushrooms Ganjam- Cashew & Kewra Nabrangpur- Maize Kandhamal- Turmeric, mango, jackfruit, maize Commodity based cluster development will enable a planned and focused approach towards developing the food processing industry in the State and based on the food

20 19 processing strengths of the respective geographically demarcated areas. Development of Mega and Medium Food Park - Kalahandi Development of Mega and Medium Food Park Dhenkanal Development of Mega and Medium Food Park - Balasore Development of Mega and Medium Food Park - Baragarh Development of food quality testing and phyto-sanitary laboratories Packaging Development Centres Agri Export Zones (AEZs) Fishery Harbours Development of Cold Storage Facilities Processing of multiple agro based products Processing of multiple agro based products Fish & Shrimp Sugarcane, Paddy Quality testing of multiple commodities Infrastructure for packaging requirements of processed food units Export of multiple agro products Harbours to facilitate fisheries The Mega Food Parks will be developed according to the Mega Food Park Scheme by the Ministry of Food Processing. Dhenkanal has significant production of mangoes, maize, sunflowers, vegetables, cashews and mushrooms. It has ample opportunities in processing and marketing in honey and medicinal plants. Marine fisheries related activities is one of the major occupation of the people in this district. Abundance of water resources makes it the preferred destination for fisheries. Sadar and Chandipur blocks are known for practicing pisciculture. Bargarh has highest agricultural output among all the districts of the State. Significant production of sugarcane, vegetables, groundnuts and paddy. The setup of testing labs will have common usage in a cluster as well as to be used by a single unit. The labs are to ensure desired quality of produce for export and domestic consumption. With the growth in the processed food industry, the demand for packaging facilities would be fulfilled by the packaging development centers to be created in the state. Four AEZs will be developed for Mangoes, Cashew, Kewda and paddy among other agro products for export. In order to boost the testing and quality control facilities for the marine processing units in the State, a state-of-the-art laboratory for processors and exporters Cold storage facility Creating of Infrastructure, operation and maintenance of 7 Cold Storage Facilities through PPP Mode. These facilities would be utilized for multiple commodities and products.

21 20 References Statistical Year Book India 2017, MOSPI (includes state highway, national highway, other PWD roads, rural roads, urban roads). 7 As per Ministry of Railways press release (As on ) %5BPDF Format%5D.pdf

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23 TRANSFORMING THE FOOD ECONOMY 3-5 November, 2017 Vigyan Bhawan, New Delhi, India About World Food India A global event to facilitate partnerships between Indian and international businesses and investors, World Food India (WFI) is a gateway to the Indian food economy and an opportunity to showcase, connect, and collaborate. Ministry of Food Processing Industries, Government of India Panchsheel Bhawan, New Delhi, India. Telephone Number: / / / Find us at: