But where's the beef?

In the mid-eighties, the Wendy's chain of hamburger restaurants in the United States came up with a television commercial that had a woman being handed a burger with a huge bun and a small patty. The woman isn't too pleased and exclaims: "Where's the beef?" Since then, the phrase has been often used - as in the TV series The Simpsons and even by songwriter, poet and novelist Leonard Cohen in one of his songs - to question the substance of an idea or product.

Take a glance at the various segments of the Indian food processing sector - fruits and vegetables, marine products, milk and milk products, buffalo meat, and poultry - and you would be tempted to ask: "Where's the beef in this industry?" And it's not just buffalo meat we are talking about. For instance, for fruits and vegetables, just a little over two per cent of the produce is processed. Contrast this with a processing level of 30 per cent in Thailand, and close to 80 per cent in the Philippines and Malaysia.

In the dairy sector, the level of processing is at around 37 per cent, compared to 60-70 per cent in developed countries. Since post-harvest wastage is at up to a third of the production, processing offers an opportunity to reduce these losses and to increase the farmer's income.

The industry is broadly divided into six segments - fruits and vegetables, dairy, meat and poultry, fisheries, grains and cereals, and consumer foods. It is still dominated by small and unorganised players. Investments from larger, more organised players are also coming in largely due to changing consumption trends in India - a movement from cereals to higher value products such as meat-based products.

A growing urban population and a burgeoning middle class might well be just what the doctor ordered for the growth of food processing. "Pasta consumption in India is growing at 15 per cent. Ten years ago, who would have thought that you could make money by selling pasta in India," asks Rakesh Bharti Mittal, Vice Chairman and Managing Director of Bharti Enterprises, who directs the group's agri business.

Pasta may be growing on a very small base, but it is indicative of the seismic shift under way in the Indian food bazaar, which has traditionally shied away from culinary adventure. Avantha Group entity The Global Green Company, which is one of the largest gherkin exporters in the world, is now introducing its consumer brand, Tify, in the local market.

Vineet Chhabra, Managing Director and Group CEO, says: "Tify was till recently exotic, niche, and premium. It was a global food for global people, a Western condiment kind of category. Today, we have reoriented Tify for India." That reorientation involves packaging strawberry jam with fruit pieces in it and tomato ketchup with more tomato.

Food processing has traditionally positioned itself as export-oriented. That will change, as the domestic market matures. As Mittal of Bharti Enterprises points out: "India needs to first develop the domestic market, which also involves focusing on safety, hygiene, and quality. Once you have delivered that, you can look overseas." In the years ahead, Indian consumers should find more meat in the bun and food marketers will get a bigger bang for their buck.

WHY FOOD PROCESSING MATTERS...

• India's food processing industry is valued at $70 billion
• Processed food constitutes more than 35 per cent of the food market
• A one percentage point growth in the food sector has the potential to generate additional direct employment for 5 lakh people and indirect employment for 15 lakh people
• The Ministry of Food Processing Industries envisages tripling the size of the processed food industry by increasing the levels of processing for perishables from 6 per cent to 20 per cent

- Additional reporting by K.R. Balasubramanyam