Mega Food Parks
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Baljit Dhaka

Mega Food Parks

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Economics

Mega Food Parks

Why in the news?

Recently, Avante mega Food Park in Dewas (Madhya radish) was inaugurated. This is the first food park in central India.

The government has come up with a Draft National Food Processing Policy in 2019 to boost the food processing industry. 

Mega Food Parks (MFP)

Introduced in 2008, the scheme aims at providing modern food processing infrastructure along the integrated value chain from farm to market with a cluster-based approach.

It operates in a “hub and spoke model” comprising Collection Centres (CCs) and Primary Processing Centres (PPCs) as spokes and a Central Processing Centre (CPC) as the hub.

It includes the creation of infrastructure for primary processing and storage near the farm in the form of PPCs and CCs and common facilities and enabling infrastructure like roads, electricity, water, etc. at CPC.

These PPCs and CCs act as aggregation and storage points to feed raw material to the processing units located in CPC.

These are demand-driven projects and facilitate food processing units to meet environmental, safety, and social standards.

MoFPI does not establish MFPs on its own but assists Special Purpose Vehicle (SPV) registered under the Companies Act and State Government/State Government entities / Cooperatives to establish MFPs.

Financial assistance is provided as grant-in-aid @ 50% of the eligible project cost in general areas and @ 75% in NE Region and difficult areas [Hilly States and Integrated Tribal Development Project (ITDP) areas] subject to a maximum of Rs. 50 crore per project.  

Significance of MFP Scheme

The scheme intends to facilitate the establishment of an integrated value chain, with food processing at the core and supported by requisite forward and backward linkages.

 

The scheme aims to bring together farmers, processors, and retailers and link agricultural production to the market to ensure the maximization of value addition, minimization of wastage, and improving farmers’ income.  

Progress achieved under MFP scheme

The government has so far approved 42 Mega Food Parks. However, only 18 MFPs have been operationalized.

Modern processing and preservation capacity of 23.02 Lakh MT & 63 PPCs with the farm-level infrastructure of 2.45 Lakh MT have been created so far in operational parks. 

Challenges of Mega Food Parks

The units in the MFP cannot own land and, therefore, they cannot use the land as collateral to take loans from banks.

Delay in statutory clearances from State Government/Agencies.

There are also problems of change in Detailed Project Report during the implementation of the project, delay on the part of promoters to contribute their equity, change in promoters midway.  

The approach of the scheme is basically ‘one-size-fits-all’ and the scheme has not been able to attract investors with different investment requirements.

The SPVs complain that the skill levels of workers are poor and a skilled workforce is not cheap.

The timeline of 30 months to make the park operational is too tight and it does not take into account the contingencies.

The awareness of the scheme is low.  

Way Forward

The government has come up with a Draft National Food Processing Policy, 2019 to boost the food processing industry. It will boost the MFP scheme through the following enabling provisions-

It suggests a review of the scheme parameters to ensure flexibility in terms of the requirement of different clusters and continue to extend financial assistance on a need basis.

The Policy envisages enhanced the role of States in the development of food parks, where the state government would allot land, on a priority basis, to such parks to promote the Agri & food processing industry apart from support setting up of such parks in their respective states from their own resources.

extend incentives viz. capital investment subsidy, stamp duty exemption, conversion charges to food parks and the units set up in such parks, under their respective policy.

identify crop production and processing clusters using space technology and other IT tools and provide end to end value chain solution and backward and forward linkages.

Mega Projects, as defined by the Centre and the state governments, would be supported in fast track mode and will receive priority in the allotment of land, sheds in industrial parks, electricity, water connection, environmental clearances, etc.

Special incentive packages will be provided by the central and state governments to promote such projects which will support the development of a cluster of smaller units around it.

The Policy seeks to promote the establishment of “Specialized Agro-Processing Financial Institutions” (SAPFI) for the food processing sector through appropriate incentives. This will ensure easier access to credit to MFPs.

Cold chain and Food Parks have been declared as infrastructure to ensure a greater flow of funds to the sector on easier terms.

Related information

Significance of the food processing sector  

A well-developed food processing sector with a higher level of processing helps in the reduction of wastage, improves value addition, promotes crop diversification, ensures a better return to the farmers, promotes employment as well as increases export earnings.

This sector is also capable of addressing critical issues of food security, food inflation, and providing wholesome, nutritious food to the masses.  

These constraints are sought to be addressed through the Central Sector umbrella scheme of Pradhan Mantri Kisan Sampada Yojana (PMKSY) of the Ministry of Food Processing Industries (MoFPI). One of its components is the Mega Food Parks.  

PMKSY is a comprehensive package resulting in the creation of modern infrastructure with efficient supply chain management from farm gate to retail outlet.

 

The allocation under PMKSY is Rs.6,000 crore for the period 2016-20 coterminous with the 14th Finance Commission cycle.

Seven schemes are implemented under PMKSY: 

Mega Food Parks; 

1. Integrated Cold Chain and Value Addition Infrastructure; 

2. Creation/Expansion of Food Processing & Preservation Capacities (Unit Scheme); 

3. Infrastructure for Agro-Processing Clusters; Creation of Backward and Forward Linkages; 

4. Food Safety and Quality Assurance Infrastructure; 

5. Human Resources and Institutions.

The MoFPI is also implementing the central sector scheme "Operation Greens" as a vertical of PMKSY since November 2018. 

Status of Food Processing Sector in India

The sector constituted nearly 8.83% and 10.66% of Gross Value Added (GVA) in the Manufacturing and Agriculture sector respectively in 2017-18 at 2011-12 prices.

Nearly 7 million people are engaged in this sector.

The value of processed food exports in 2018-19 was $35.30 Billion accounting for about 10.69% of India’s total exports.

The annual value of harvest and post-harvest losses of major agricultural products at the national level was at Rs.92,651 crore calculated using production data of 2012-13 at 2014 wholesale prices.