Food Processing: Adding Value to Farm Produce

Why only a small share of India's fruits and vegetables are processed, how post-harvest losses waste food and income, and the policies to build a processing industry.

India is one of the world’s largest producers of fruits, vegetables, milk and grains. But only a small share of its fruits and vegetables is processed into products like juices, pulp, pickles, frozen foods and sauces. Much produce is sold fresh or wasted.

Why processing matters

Less waste: processing preserves produce that would otherwise spoil.
Higher farmer incomes: processors can buy surplus produce when prices crash.
Jobs: food processing is labour-intensive.
Exports: processed foods can be sold worldwide.
Stable prices: processing absorbs gluts, like tomatoes during harvest peaks.

Post-harvest losses

A 2022 study for the government estimated post-harvest losses of fruits, vegetables, grains and other produce at over 1.5 lakh crore rupees a year, due to poor storage, handling and transport.

Why the industry is small

Fragmented supply: millions of small farmers make it hard to get consistent volumes.
Cold chain gaps.
Quality and varieties: some crop varieties are bred for fresh eating, not processing.
Consumer habits: many Indians prefer fresh food.
Taxes and regulation on processed foods.

Government support

PM Kisan SAMPADA Yojana, launched in 2017, supports food parks, cold chains and processing units.
Production Linked Incentive scheme for food processing, from 2021, rewards companies for increasing sales of processed foods.
PM Formalisation of Micro Food Processing Enterprises, supporting small units like local pickle and snack makers.
One District One Product initiatives linking districts to specific foods.

Health concerns

Some processed foods are ultra-processed, high in sugar, salt and fat. Growth in processing should balance convenience with nutrition.

The tomato glut

When tomato prices crash during a bumper harvest, farmers in one district sell to a nearby processing plant that makes puree and ketchup. Without the plant, many would have dumped their crop on the roadside.

Thinking processing always means unhealthy food

Processing includes freezing, drying and pulping that preserve nutrients and reduce waste. Ultra-processed foods are a specific concern.

Key takeaways

Only a small share of India's fruits and vegetables are processed.
Post-harvest losses were estimated at over 1.5 lakh crore rupees a year.
Fragmented supply and cold chain gaps limit the industry.
SAMPADA, PLI and micro-enterprise schemes support food processing.