Food Processing can be highly simple or technical depending upon
- Basic volatality and preservation problems seen in many agri commodities,
- Complexity of processes involved,
- Quality of man power required to control processes,
- Amount of invetsment required for providing controlled environment,
- Maturity of marketing channels involved in the value-chain, and
- Evolution of market.
Lets take an example to test these out. I come from Muzaffarpur, place famous world over for its exotic fruit Litchi.
Litchi is a plantation crop. Its plantation resemples mango orchard, and fruit is similar to strawberry in look. But its taste.... is like no other. If you ever lay your hands on Shahi Litchi (the royal variety of fruit), you will know what god had in mind when he designed nectar.
Well, seems like exaggeration. Taste it to know that I am not lying.
This fruit is so good..... and like all good things/ persons, it doesn't last long. It has an yearly fruiting cycle of only two weeks. When it is plucked from tree, it is green going red. Within 36 hours, it grows full red and you can have it. In fact, thats the only time you can have it, because in few hours (in 48 hours) it will turn purple and will start going bad.
Now, lets list out food processing challenges with this fruit and test my hypothesis given at the start.
- Basic volatality and preservation problems seen in many agri commodities
Litchi has this problem in abundance. You can't put it in cold storage as it has a pulp and a cover that doesn't sustain too cold a temperature. Its shelf life is maximum of two days. Equity analysts habituated of having comfort of price barriers in stock market and matured commodity markets will go mad if they are told of litchi price-graph in a short span of 2 months and probably at the same time but in different markets. Price at the start of fruiting season at Muzaffarpur is around Rs. 20 for 100 litchi fruits (or 0.50 Dollars). Around 15 litchi fruits make 1 Kg (i.e. 1000 Grams), hence one Kg of Litchi costs Rs. 1.30 at Muzaffarpur. When the same licthi is sold in Mumbai, Delhi or Hyderabad, price could be anything between Rs. 30 to Rs. 100 per Kg. Can anyone tell me RoE and RoI in this case. Or will the calculator return infinite as result?
There are few more issues but crux of the matter is - Preserving litchi is not easy. The market is imperfect, hence price fluctuations are erractic and unmanageable. Because of such high volatality, the producers either sell too cheap or bear the brunt of downward trends (if they wait).
- Complexity of processes involved,
How will you preserve a fruit with shelf life of 48 days? Do some mixing, chemical bleaching, do something with its pulp, and add preservatives so that it lasts in your stock for future processing and conversion in to different products. Sounds simple but is very difficult. Government of India as well as many corporates have identified this challenge and have set aside a committed fund to solve this issue. Scieintific community is also engaged deeply, looking at option, testing out new methods and evolving newer commercially viable presrvatives. Success still eludes in a techincal sense, few bright spots along the journey suggest that they are on right track. Enough on complexity of processes involved.
How will you preserve a fruit with shelf life of 48 days? Do some mixing, chemical bleaching, do something with its pulp, and add preservatives so that it lasts in your stock for future processing and conversion in to different products. Sounds simple but is very difficult. Government of India as well as many corporates have identified this challenge and have set aside a committed fund to solve this issue. Scieintific community is also engaged deeply, looking at option, testing out new methods and evolving newer commercially viable presrvatives. Success still eludes in a techincal sense, few bright spots along the journey suggest that they are on right track. Enough on complexity of processes involved.
- Quality of man power required to control processes,
If the best politicians, administrators, scientists and industrialists are involved at grand scale, quality of human intervention is easy to acknowledge. When industry matures, the complexity of processes involved will decide which quality of man power will be required to man the operations of a jelly-mixing unit or a juice-extractor or a wine brewer (possible uses of Litchi, i dream of!).
- Amount of invetsment required for providing controlled environment,
Need to say a wine brewer will need continuous supply of litchi. That will need a good preserving unit. That will need good technology. Good technology costs.
A pulp making and preserving unit needs scientific intervention first to make it happen, and a commercial sense to make it feasible. Anywhichway, it costs.
The plantations are perennial, but the fruiting cycle is so short and the land availability so fastly reducing that any future plantation will carry a pay-off analysis. The productivity enhancement attempts are already underway, and better species are round-the-corner (not literally. It may take another year or so, or perhaps years, till we jump into red-revolution).
How much money will it take India to reach there? very many, I believe.
- Maturity of marketing channels involved in the value-chain
Think of tetra pack juices, high quality wines, delicious jams, crunchy biscuits....... think of Mega malls, retail stores, grocery stalls, market places with bill boards, trucks transporitng goods, trains carrying boxes and crates......... Corner shop selling cigarettes and biscuits, vegetable vendors delivering your order at your door step........ ok, enough.
That is dream. Reality is - the market for lithci products are not as established as, say, for grains, instant food, coffee, tea, and soaps. Its a premium product which many people haven't even heard of....... So, maturity of marketing channels is low. We have farmers as plantation/ orchard owners, and small time vendors and vetetable shop owners which double up as commission agents. And then there are small retailers and finally consumers. Really simple. No complexity involved. No value addition, hence not much need for marketing (hey, its a big statement and almost defines why marketing is needed).
But we need to move on and create that market. So, complexity goes up directly (or probably exponentially)!
- Evolution of market
point well taken. Same logic as above.
Now, you see. I am a fool who wants to take a plunge.
I am not alone. This world is full of such fools.
Success is anybody's guess.
