Context

The Pradhan Mantri Formalisation of Micro food processing Enterprises (PMFME) Scheme to enhance the competitiveness of existing individual micro-enterprises in the unorganized segment of the food processing industry and promote formalization of the sector, marks the completion of its one year.

Background

• The unorganized food processing sector in the country comprises nearly 25 lakh food processing enterprises which are unregistered and informal
• With only 7% of investment in plant & machinery and 3% of outstanding credit, the unorganized enterprises contribute to 74% of employment (a third of which are women), 12% of output and 27% of the value addition in the food processing sector.
• Taking cognizance of the contribution of the unorganized micro food processing enterprises and the challenges that impede their performance, Ministry of Food Processing Industries has launched PM FME Scheme.

Analysis

What is PM FME Scheme?

• Launched in June 2020, the PM FME Scheme is currently being implemented in 35 States and Union Territories.
• Under the One District One Product (ODOP) component of the PM FME Scheme, the Ministry of Food Processing Industry approved ODOP for 707 industries for 35 States and UTs.

Objectives of the Scheme

• Capacity building of entrepreneurs through technical knowledge, skill training and hand holding support services
• Increased access to credit to existing micro food processing entrepreneurs for technology up-gradation
• Support to Farmer Producer Organizations (FPOs), Self Help Groups (SHGs), Producers Cooperatives & Cooperative Societies along their entire value chain to enable microenterprises to avail common services
• Support for transition of existing enterprises into formal framework for registration under regulatory framework and compliance
• Integration with organized supply chain by strengthening branding & marketing

One District One Product

• The Scheme adopts One District One Product (ODOP) approach to reap the benefit of scale in terms of procurement of inputs, availing common services and marketing of products.
• ODOP for the scheme will provide the framework for value chain development and alignment of support infrastructure.
• There may be more than one cluster of ODOP product in one district. There may be cluster of ODOP product consisting of more than one adjacent district in a State.
• The States would identify the food product for a district, keeping in perspective the focus of the scheme on perishables
• Certain other traditional and innovative products including waste to wealth products could be supported under the Scheme

Seed Capital

• Seed capital @ Rs40,000/- per member of SHG for working capital and purchase of small tools would be provided under the scheme
• Priority would be given for SHGs involved in ODOP produce in giving seed capital

Milestone Achieved in 1 year

• The GIS ODOP digital map of India has been launched to provide details of ODOP products of all the States and UTs.
  • The digital map also has indicators for Tribal, SC, ST, and aspirational districts. It will enable stakeholders to make concerted efforts for its value chain development.
• An agreement has been signed with the Union Bank of India as the Nodal Bank of the scheme and MoUs with 11 banks as official lending partners for the PMFME Scheme.
• National Rural Livelihood Mission has recommended 43,086 SHG members to State Nodal Agencies (SNA) for an amount of Rs. 123.54 Cr. SNA has approved the seed capital of 8040 members and disbursed the amount of Rs. 25.25 Cr. to State Rural Livelihood Mission.  
• MoUs have been signed with NAFED and TRIFED to take up the marketing and branding support for 10 products each

Challenges with informal Food Processing Industry

• lack of productivity and innovation due to limited skills and access to modern technology and machinery for production and packaging;
• deficient quality and food safety control systems, including lack of basic awareness on good hygienic and manufacturing practices
• lack of branding & marketing skills and inability to integrate with the supply chains
• capital deficiency and low bank credit
• 80% of them are family based enterprises supporting livelihood in rural household and minimizing their migration to urban areas

What measures are required?

• Robust measures: The food processing industries have a larger scope for acceleration in future given the thrust on doubling farmer’s income. It demands for a vibrant and robust response from agro-based food and agro-based non-food industries and other stakeholders.
  • Effective storage: The cold storage facilities need to be developed in the major production catchments so that the farmer has the option to store the produce and may hold it back when the market is saturated and sell it when shortages occur.
  • Transforming into export industry: Turning agro and food-processing industry into a major export industry can also create vast employment opportunities for workers since it is a labour intensive industry.
  • Promotion of agri-based industries: Agri-based industries conform to the notion of competitive advantage both within and outside the country. They can play a role of a safety valve to absorb surplus rural labour and can address the problem of large scale unemployment/disguised employment in rural areas.
  • Focused primary processing: To reduce waste and cut back on transport and handling costs, primary processing of all foods and processing of perishable foods needs to be undertaken in, or adjacent to, the point of production.
• National plan: It is high time that the national plan for improvement and extension of agro-processing technology at farm, traditional small industry and modern industry levels is prepared, while taking into account the diversity in resources and needs of different regions in the country.
• More financial support: Thrust areas for research and development need to be identified and met with. More financial incentives and support need to be provided to promote the modernization of agro-processing industry and for establishing new such industries in production catchments.

Conclusion

The government needs to ensure a level playing field to food processing industries vis-à-vis unfair trade practices adopted by exporters of other countries. Awareness generation amongst agro-based industries becomes a key ingredient in successful utilization of available trade remedies and to protect them from unfair trade practices of exporters of other countries.