Food Processing Sector in India

Food Processing Sector in India

The food processing sector is critical to India’s development. It establishes vital linkages and synergy between industry & agriculture, the two pillars of the economy. India is the world’s second largest producer of food and holds the potential to become the food provider of world. The growth of this industry will bring immense benefits to the economy, raising agricultural yields, enhancing productivity, creating employment and raising life-standards of people across the country, especially in rural areas.

This industry ranks fifth in the country and employs 16 lakh workers, comprising 19% of the country’s industrial labour force. It accounts for 14% of total industrial output with 5.5% of the GDP. Its turnover is estimated at Rs.1,44,000 crore, of which Rs.1,11,200 crore is in the unorganised sector. The liberalisation of the Indian economy and world trade and rising consumer prosperity has thrown up new opportunities for diversification in the food-processing sector and opened new vistas for growth.

Fruit and Vegetable Processing– National Environment

India has made a good progress on the horticultural map of the world with a total annual production of horticultural crops touching over 149 million tonnes. India is the second largest producer of the fruits (45.5 Million tonnes) and vegetables (90.8 Million tonnes) in the world, contributing 10.23% and 14.45% of the total world production of fruits and vegetables respectively. It is also the largest producer, consumer and exporter of spices.

The fruit and vegetable processing industry in India is highly decentralized. A large number of units are in the cottage/home scale and small scale sector, having small capacities upto 250 tonnes/annum though big Indian and multinational companies have capacities in the range of 30 tonnes per hour or so. The prominent processed items are fruit pulps and juices, fruit based ready-to-serve beverages, canned fruits and vegetables, jams, squashes, pickles, chutneys and dehydrated vegetables. More recently, products like frozen pulps and vegetables, frozen dried fruits and vegetables, fruit juice concentrates and vegetable curries in restorable pouches, canned mushroom and mushroom products have been taken up for manufacture by the industry. The processing level in India is estimated to be around 2%, as compared to about 80% in Malaysia, 30% in Thailand, and 60-70% in the UK and USA.

The domestic consumption of value added fruit and vegetable products is however, very low compared to the primary processed food in general and fresh fruits and vegetables in particular which is attributed to higher incidence of tax and duties including that on packaging material, lower capacity utilisation, non-adoption of cost effective technology, high cost of finance, infrastructural constraints, inadequate farmers-processors linkage leading to dependence upon intermediaries. The inability for market promotion is an important reason for inadequate expansion of the domestic market.

India’s share in the world trade of horticultural processed products too, is miniscule – less than 1 per cent. This compares very unfavourably with countries like Malaysia (83%), Philippines (78%), Brazil (70%) and US (70%). India’s major exports are in fruit pulp, pickles, chutneys, canned fruits and vegetables, concentrated pulps and juices, dehydrated vegetables and frozen fruits and vegetables.

Supply chain efficiencies together with a focused approach to enhance exports are the key to ensure that India is able to successfully tap new product/market opportunities. India has the potential to achieve a 3% share in the world trade of agricultural and food products by 2015. This implies an annual growth rate of 14% till 2010 and 15% annual growth from 2010 as tabulated below:

Year	World Exports*	India’s Exports	India’s Share (%)	Growth Rate (%)
2003	522	8	1.5	-
2010	770	15	2.0	14
2015	1020	30	3.0	15

*World Exports of 2010 & 2015 are projected on the basis of CAGR of 6% for the 5year period (1999-2003)
Source: Vision Strategy & action Plan for Food Processing Industries in India. Prepared by Rabo India Finance Pvt Ltd for Ministry of Food processing Industries, Government of India April 2005

Major Challenges, Constraints and Concerns

Despite policy initiatives, growth potential and significant achievements, there are several disturbing trends as delineated here :

• In India, the value addition to food fortification is only 7% compared to as much as 23% in China, 45% in Philippines and 188% in the UK. The small-scale and unorganised sectors account for 75% of the total industry.
• External liberalisation poses threats of stiffer competition under a new world trade order with WTO agreements relaxing quantitative restrictions and non-tariff/sanitary barriers on importing countries which exposes the Indian farmer to world market forces. Under the new trade regime, the food sector will be confronted by challenges of trade related Intellectual Property Rights, comprising patent laws, copyrights, trade links, etc.
• The inherent strength of high raw material production and large domestic market base has to be buttressed with operating processing units at optimum capacity levels as per economies of scale which would enable achieving a competitive edge over imported products.
• Advances in bio-technology have enabled production of Genetically Modified (GM) foods. These have already appeared in some countries. GM foods need be critically examined on their good and adverse impacts on human health.
• Taxes on processed food in India are among the highest in the world. No other country imposes excise duty on processed food and distinguishes between branded and unbranded food sectors for taxation. There is excise duty of 16% in the form of CENVAT levied on food products. Besides there is sales tax, octroi, mandi samiti, entry tax and customs duty on material, levied by the Central/State/Local bodies. The net effect ranges from 21% to 30% on various food items.
• Commercial R&D activities in the food industry have remained confined to only a few areas. R&D activities have scarcely emerged from the laboratory to be extensively adopted on the field.
• Indian brands have yet to acquire an image in the international markets because of poor global marketing.
• Most Financial Institutions lack capacity to appraise hi-tech export-oriented projects. There are no suitable insurance schemes for such projects, most of which deal in export of perishables. In financing such projects the banks face considerable credit risks. With new technology, the risk perception is higher than the existing one.
• The sector has been characterised by poor marketing, transport and communication infrastructure. The market density of fruits and vegetables is low and facilities for storage and cold chains in the hinterlands are woefully inadequate. Erratic and inadequate power supply, lack of roads, education and health facilities and null or low rural industrialisation accentuates the problems.

Government and Regulatory Bodies

Government and Regulatory Bodies

Public Health Laboratory:

PHL is a Government laboratory based in Pune with the primary role of undertaking tests on behalf of the Public Health departments that monitor the quality of water supply and samples drawn from the food manufacturing units. It also undertakes testing directly on behalf of the entrepreneurs on a nominal fee.

FDA (Food and Drug Administration)
Food and Drug Administration, Maharashtra State, the State's primary instrument of Consumer protection, is a scientifically based law enforcement agency. Initially, this Administration came into being as Directorate of Drugs Control which was meant for enforcing mainly the Drugs and Cosmetics Act and Rules thereunder. Later in the year 1970, Government entrusted the responsibility of enforcement of the Prevention of Food Adulteration Act, 1954, to this Directorate and then it was renamed "Food and Drug Administration".

Address -
FDA,
Bandra-Kurla Complex,
Bandra (East), Mumbai 400051 Maharashtra, India
Tel - 91-22-6592361-65 / 91-22-6592123 / 91-22-6592149
Fax - 91-22-6591959
Email - fdahq@vsnl.com

National Horticulture Board

National Horticulture Board (NHB) was set up by the Government of India in 1984 as an autonomous society under the Societies Registration Act 1860 with a mandate to promote integrated development in horticulture, to help in coordinating , stimulating and sustaining the production and processing of fruits and vegetables and to establish a sound infrastructure in the field of production, processing and marketing with a focus on post harvest management to reduce losses.

Address:
National Horticulture Board
C/o Office of Director Horticulture Commisionerate of Agriculture(Govt. of Maharashtra), Shivaji Nagar, K.B. Marg Pune 411 005
Tele/Fax 020-25530582-83
E-mail : jbsingh6@rediffmail.com

National Horticulture Mission
A National Horticulture Mission has been launched as a Centrally Sponsored Scheme to promote holistic growth of the horticulture sector through an area based regionally differentiated strategies. The scheme will be fully funded by the Government and different components proposed for implementation financially supported on the scales laid down.

Address:- 
Shri. B. V. Gopal Reddy - Managing Director
SHM & MPB, Sakhar Sankul, Shivajinagar, Pune-411005 Maharashtra
Phone: 020-25535441,(R)26334260
Fax: 25535441
Email: gopalreddyby@gmail.com, msnhm_pune@rediffmail.com

Maharashtra State Agricultural Marketing Board (MSAMB),

The Maharashtra State Agricultural Marketing Board (MSAMB), Pune was established on 23rd, March 1984, under section 39A of Maharashtra Agricultural Produce Marketing (Regulation) Act, 1963. MSAMB has done pioneering work in the field of Agricultural Marketing in the State and achieved success in various areas. MSAMB is having an important role in developing and coordinating agricultural marketing system in the State of Maharashtra.

Address:-

Maharashtra State Agricultural Marketing Board
R-7, Market Yard, Gultekadi, Pune 411 037. Maharashtra, India
Tel: 020 2426 1190, 2426 8297
Fax: 020 2427 2095
E-Mail: msamb@vsnl.com

Maharashtra State Warehousing Corporation

Maharashtra State Warehousing Corporation was established on 8th August,1957, under the Agriculture Produce (Development & Warehousing) Act,1956, which was subsequently replaced by the Warehousing Corporations Act,1962.  The functioning of the State Warehousing Corporation is done on the basis of said Act & the detailed procedure formultated under Bombay Warehouses Act,1959 and Bombay Warehouses Rules,1960 duly amended from time to time.

Warehousing activities of MSWC include scientific storage of food grains, fertilizers, industrial goods , cotton bales, cement, and at some places it runs custom bonded warehouses and container freight stations.

Address:-
Maharashtra State Warehousing Corporation
583/B, Market Yard, Gultekadi, Pune - 411037, Maharashtra, India.
Tel.: 91 020 24262951, 24262953-55.
Fax: 91 020 24270917, 24270018

College of Agriculture, Pune

The College of Agriculture, Pune is one of the first five agriculture Colleges established in India. From its very inception, there has been a close co-ordination between research and teaching. After establishment of Maharashtra Agricultural University in the year 1968 , the College of Agriculture, Pune was transferred to the University as a constituent College. In 1969, the College was transferred to the Mahatma Phule Krishi Vidyapeeth (Agricultural University), Rahuri established in that year. The B.Sc.(Hort) degree programme was started in the year 1984. The University headquarters are located in Rahuri, Dist.Ahmednagar 160 km to the north of Pune.

Address:-
Dr. T.A. More - Dean & Director of Instructions
Mahatma Phule Krishi Vidyapeeth
Rahuri - 413722 Dist. Ahmednagar, Maharashtra INDIA
Email: dean.mpkv@nic.in

National Bank for Agriculture and Rural Development (NABARD)

NABARD is set up as an apex Development Bank with a mandate for facilitating credit flow for promotion and development of agriculture, small-scale industries, cottage and village industries, handicrafts and other rural crafts. It also has the mandate to support all other allied economic activities in rural areas, promote integrated and sustainable rural development and secure prosperity of rural areas.

Address:-
Shri S Santhanam - General Manager
Maharashtra Regional Office
54, Wellesley Road, Shivaji Nagar, Post Box No. 5, Pune – 411005
Tel: (91) 020 25512090
        (91) 020 25911439
Fax: (91) 020 25511489
Email: pune@nabard.org

Directorate of Horticulture Govt. of Maharashtra

At A Glance:

Maharashtra is a leading state in agriculture and now emerging as an important horticultural state in the country. Different types of soil, diverse agro climatic conditions, adequate technical manpower, well developed communication facilities increasing trend in drip irrigation, green house, use of cool chain facilities and vibrant farmer organisation offer wide apportunities to  grow different horticultural crops in the state.  State's endeavours to launch a special horticulture development programme linked to Employment Guarantee Scheme has helped to take up the area under different fruits over one million hectare. Best quality grapes   produced in the state are now  exported  to  other  countries.   Mango, particularly "Alphanso" cultivar, grown in Konkan has already established name in the international market. Efforts to expand other fruits like  pomegranate,  banana will also succeed in very near future .  Already established  250 regulated   markets  in  the  state  also offer opportunites to the fruit growers for marketing of fruits.

State is pioneer in onion production in the country. Export of onion from Maharashtra is increasing since last five years. Chillies occupy as area of around 1.50 lakh ha. Other vegetables also have potential to be grown in the state. The state has started the production of "True Potato Seed" and the farmers have shown interest in adopting this technology. Also mushroom production especially flaked mushroom is getting popularized. The formation of growers organizations is getting momentum. The state is having few units in private sector growing button mushrooms. The is having All India Co-ordinated Mushroom Development Centre at Pune.

Floriculture in the state is of a very recent origin,  Till  recent  past  floriculture in the state was confined only to the traditional flowers. However the private sector has now entered in this field on a very large scale with green house technologies where cut flowers like roses, carnetions, Gerberas, anthurium, orchids etc. are grown on a large scale.

Address:-
Dy.Director Hort - 1,Add-Directorate of Horticulture, Shivajinagar, Pune -5
Ph/Fax: 020-25538337 -020-25537565
Email: agridhrt.mah@nic.in

The National Small Industries Corporation Ltd. (NSIC)

National Small Industries Corporation Ltd. (NSIC), an ISO 9001 certified company, since its establishment in 1955, has been working to fulfill its mission of promoting, aiding and fostering the growth of small scale industries and industry related small scale services / business enterprises in the country. Over a period of five decades of transition, growth and development, NSIC has proved its strength within the country and abroad by promoting modernization, upgradation of technology, quality consciousness, strengthening linkages with large and medium enterprises and enhancing exports – projects and products from small industries.
NSIC operates through 6 Zonal Offices, 26 Branch Offices, 15 Sub Offices, 5 Technical Services Centres,3 Extension Centres and 2 Software Technology Parks supported by a team of over 500 professionals spread across the country. To manage operations in Gulf and African countries, NSIC operates from its offices in Dubai and Johannesburg.

NSIC carries forward its mission to assist small enterprises with a set of specially tailored schemes designed to put them in a competitive and advantageous position. The schemes comprise of facilitating marketing support, credit support, technology support and other support services.

Address:-
The National Small Industries Corporation Ltd. (NSIC)
Janki Hall Compound, Shankar Seth Road,
Swargate, Pune-411037
Telefax: 020-24440546

Directorate of Industries

Address:-
Joint Director of Industries
(Pune Division)
Pune Agriculture College Compound
Shivaji Nagar,
Pune-411 005

Maharashtra State Institute of Hotel Management & Catering Technology:
Set up in 1974 the institute offers full time training programs in hotel management and catering technology, Travel & Tourism', minimum competency vocational courses in Cookery, Bakery and Institutional housekeeping'.

Related Links for Food Processing

Ministry of Food Processing & Industries The Ministry of Food Processing Industries, set up in July 1988, is the main  central agency of the Government responsible for developing a strong and vibrant food processing sector; with a view to create increased job opportunities in rural areas, enable the farmers to reap benefit from modern technology, create surplus for exports and stimulating demand for processed food Website: http://mofpi.nic.in/aboutus/index.htm Vision 2020 Reports - Fruits & Vegetables: Technology Status & Future Vision The Task Force on Agro-Food Processing of TIFAC on the sub-group on Fruits and Vegetables has given the following technology status and future vision. Website: http://www.tifac.org.in/offer/vis/fruits.htm  U K based Food Processing Technology portal U K based Food Processing Technology portal which is recognised as the most powerful one-stop-shop options on the web. Used daily as means of creating partnerships and as a point of reference by professionals within the food technology industry, this comprehensive resource supplies the latest news releases, detailed information on industry projects, white papers, event information and a thorough breakdown of products and services. Website: http://www.foodprocessing-technology.com/  Agricultural and Processed Food Products Export Development Authority The Agricultural and Processed Food Products Export Development Authority (APEDA) came into existence in 1986 to further develop our agricultural commodities and processed foods, and to promote their exports. It’s main aim is to maximize foreign exchange earnings through increased agro exports, to provide better income to the farmers through higher unit value realization and to create employment opportunities in rural areas by encouraging value added exports of farm produce. APEDA went about achieving these by identifying new markets, providing better support systems to our exporters and manufactures, and introducing new products to the international market. No wonder the exports have shown a rising trend. It has increased from Rs 10169 crores in 2001-2002 to Rs. 17918.07 crores in 2005-06. Website: http://apeda.com/ Mahratta Chamber of Commerce, Industries and Agriculture Mahratta Chamber of Commerce, Industries and Agriculture is the Premier Resource Center for industry, Trade, Commerce and Agriculture. Established in 1934 for enhancing entrepreneurship in Maharashtra, MCCIA has made pioneering efforts for industrial development of this region. The Chamber is recognized as one of the Proactive Chambers of Commerce in India. It has been striving to make Pune a major global software development center. It has taken several initiatives for promoting IT industry, early establishment of IIIT in Pune and establishment of biotechnology Park near Pune. It is the first Chamber in India to include Agriculture in its name and functioning. MCCIA has always played proactive role by giving constructive suggestions for policy changes at the Local, State and National levels. Website: www.foodindia.org  Maharashtra State Agricultural Marketing Board The Maharashtra State Agricultural Marketing Board (MSAMB), Pune was established on 23rd, March 1984, under section 39A of Maharashtra Agricultural Produce Marketing (Regulation) Act, 1963. MSAMB has done pioneering work in the field of Agricultural Marketing in the State and achieved success in various areas. MSAMB is having an important role in developing and coordinating agricultural marketing system in the State of Maharashtra. Website: http://www.msamb.com/  Central Food Technological Research Institute CFTRI thus became a reality (as a constituent institute of CSIR and its third national laboratory) thanks to the vision and endeavours of its founders and a network of dedicated scientists who had a passion to pursue in-depth scientific research into one of the most fundamental aspects of human life. With over 75% of the population occupied in food raising, and no facilities to benefit from post-harvest technology till then, India hailed the birth of CFTRI and started to look at it with great expectations.   Website: http://www.cftri.com/  All India Food Processors' Association All India Food Processors' Association (AIFPA) was established in the year 1943 by some highly accredited luminaries with a vision, which now encompasses a cream of the Food Processors in India, involved in the processing of Fruits & Vegetables, Meat and Fish; Milk & Milk products, and also the manufacturers of Biscuit and confectionery products, Ready-to-serve Beverage and ethnic delicacies etc. Member Industries account for a large percentage of the total production of this industry in India and out of the total. Exports of processed food products, member industries account for considerable portion of the same. The Association maintains a close liaison with the Research Institutions like Central Food Technological Research Institute, Mysore; Defence Food Research Laboratory, Mysore; Indian Agricultural Research Institute, New Delhi; Indian Institute of Packaging, Mumbai etc. and refers the problems of the Industry to these institutions for a technological solution. Website: http://www.aifpa.net/  Indian Council of Agricultural Research The Governing Body is the chief executive and decision making authority of the ICAR. It is headed by the Director-General. It consists of eminent agricultural scientists, educators, legislators and representative of farmers. It is assisted by the Standing Finance Committee, Accreditation Board, Regional Committees and several Scientific Panels. The Secretary, Department of Agricultural Research and Education and Director-General of the ICAR functions as the Principal Advisor to the Government of India in all matters concerning research and education in agriculture, and allied fields. Website: http://www.icar.org.in/ Times Food Processing Journal Times Food Processing Journal is a useful source of information for providers and users of food processing technology. Manufacturers and suppliers of plant machinery and ancillary equipment used in food & beverage industry. Cold storage and warehousing companies find in this magazine the most up-to-date information on food processing technology being developed and used across the world. The magazine covers issues in processing and preservation of various food items like oilseeds, breakfast foods, beverages, marine foods and fruits/vegetables processing industry. The magazine gives regular updates on the industry to government agencies; educational institutions associated with the food processing industry get their regular updates on the industry through Times Food Processing Journal. Website: http://www.etfoodprocessing.com/index.html  Department of Agriculture and Coopeation Ministry of Agriculture comprises of three Departments viz. Department of Agriculture and Cooperation, Department of Agricultural Research & Education/ICAR and Department of Animal Husbandry & Dairying . The Department of Agriculture and Cooperation is responsible for the formulation and implementation of National policies and programmes aimed at achieving rapid agricultural growth through optimum utilization of the country's land, water, soil and plant resources. Website:  http://agricoop.nic.in/  Central Plantation Crops Research Institute The  Central Plantation Crops Research Institute (CPCRI) was established in 1916 and later brought under Indian Council of Agricultural Research (ICAR) during 1970. The initial mandate of the institute was on crop husbandry of coconut, arecanut, cocoa, oilpalm, cashew and spices.  The restructuring process during  VII and VIII Plan resulted in the establishment of separate Research Institute/Centres for Spices, Cashew and Oilpalm, but the  institute continues to maintain strong linkage with these institutes.  At present the Institute has a countrywide research network of four regional stations, four research centres  and 17 Centres under AICRP on palms.  Besides, the institute also hosts the headquarter of  Indian Society of Plantation Crops. Website: http://cpcri.nic.in/ Food Corporation of India The Food Corporation of India was setup under the Food Corporations Act 1964, in order to fulfill following objectives of the Food policy : Effective price support operations for safeguarding the interests of the farmers. Distribution of food grains throughout the country for Public Distribution System; and Maintaining satisfactory level of operational and buffer stocks of food grains to ensure National Food Security. Since its inception in 1965, having handled various situations of plenty and scarcity, FCI has successfully met the challenge of managing the complex task of providing food security for the nation. A strong food security system which has helped to sustain the high growth rate and maintain regular supply of wheat and rice right through the year. The efficiency with which FCI tackled one of the worst droughts of the century not only cemented its role as the premier organization in charge of food security in India, but also brought it accolades from international organizations. Website: http://fciweb.nic.in/ Defence Food Research Laboratory The Defence Food Research Laboratory (DFRL) came into being on 28 December 1961 under the aegis of DRDO at Mysore to cater the varied food challenges faced by military and para-military forces. This laboratory is engaged in research & development of traditional indigenous foods and their preservation. Website: http://www.drdo.com Food Safety India Food safety is a serious issue. There are a large number of people suffering from food-borne diseases. We need to be careful about the food we eat and the manner in which we eat it by taking elementary precautions. Simple things keep many of  the problems away. This Website is a small initial attempt to give basic information about these precautions. We hope you will find this useful and informative. We would very much like to get your feedback with questions and suggestions which can make this Website more useful. Website: http://foodsafetyindia.nic.in/index.htm The Food institute A nonprofit organization founded in 1928, The American Institute of Food Distribution (The Food Institute) has a single purpose:- Providing Information. Website: http://www.foodinstitute.com/  Indian Agricultural Research Institute The Indian Agricultural Research Institute (IARI) is the country's premier national Institute for agricultural research, education and extension. It has served the cause of science and society with distinction through first rate research, generation of appropriate technologies and development of human resources. In fact, the Green Revolution was born in the fields of IARI and our graduates constitute the core of the quality human resource in India's agricultural research and education. The Institute has all along been adjusting and improving its policies, plans and programmes to effectively respond to the needs and opportunities of the nation. During the fifties, the advancement of scientific disciplines constituted the core programme and provided the base for its fast expansion in the 1960's and 1970's in all its three interactive areas, namely, research, education and extension. Besides basic research, applied and commodity research gained great importance resulting in the development of several popular high yielding varieties of almost all major crops and their associated management technologies, which brought about an unprecedented increase in the national food and agricultural production. Website: http://www.iari.res.in/ National Institute of Agricultural Marketing The National Institute of Agricultural Marketing with its mission of imparting training to the various level functionaries involved in agricultural marketing activities and conducting consultancy research project for the sponsoring organizations has been playing an active role since its inception. The training and research activities were initiated in 1988 in the thrust areas identified in the field of agricultural marketing for the client organizations. Website: http://www.niam.gov.in/  VPKAS - Vivekananda Parvatiya Krishi Anusandhan Sansthan (Vivekananda Institute of Hill Agriculture) Vivekananda Parvatiya Krishi Anusandhan Sansthan (VPKAS), Almora, Uttaranchal, India, is a premier institute of Indian Council of Agricultural Research, engaged in hill agricultural research for North-Western Himalayan region of India. It is a multi-crop and multi-disciplinary institute. It has so far released 101 varieties of 22 crops. Some of these varieties have been released by Central Varietal Release Committee (CVRC) for other parts of India, apart from the mandate area.  It has to its credit the first hybrid maize variety for Himalayan region, viz., VL Makka 54, released in 1962.  The institute has been maintaining its tradition of hard work and excellence under the dynamic leadership of the present Director Dr. H.S. Gupta. The recognition came around when the institute bagged the coveted 'Sardar Patel Outstanding ICAR Institution Award 2000.'   Website: http://vpkas.nic.in/  National Institute of Nutrition National Institute of Nutrition (NIN) was founded by Sir Robert McCarrison in the year 1918 as ‘Beri-Beri’ Enquiry Unit in a single room laboratory at the Pasteur Institute, Coonoor, Tamil Nadu. Within a short span of seven years, this unit blossomed into a "Deficiency Disease Enquiry" and later in 1928, emerged as full-fledged "Nutrition Research Laboratories" (NRL) with Dr. McCarrison as its first Director. It was shifted to Hyderabad in 1958. Website: http://www.ninindia.org  The Protein Foods & Nutrition Development Association of India The Protein Foods & Nutrition Development Association of India (PFNDAI) was set up as a forum for all the stakeholders committed to betterment of human nutrition.The prime objective of PFNDAI can be summed up as follows ".....to promote and encourage fundamental & data based research in the sciences and development of all facets of knowledge associated with human nutrition..., diffuse knowledge and create the proper climate and environment for the application and acceptance of the principles of good food and balanced nutrition among all sectors and classes of people in the country...." PFNDAI looks ahead to its role as a facilitator in these challenging & fulfilling times which lie ahead in the process of building a healthy population. Website: http://www.pfndai.com

Biotechnology applications in food processing: Can developing 
countries benefit?


1. Introduction
Biotechnology includes a wide range of diverse technologies and they may be applied in each of the different 
food and agriculture sectors. It includes technologies such as gene modification (manipulation) and transfer; 
the use of molecular markers; development of recombinant vaccines and DNA-based methods of disease 
characterisation/diagnosis; in-vitro vegetative propagation of plants; embryo transfer and other reproductive 
technologies in animals or triploidisation in fish. It also includes a range of technologies used to process the 
raw food materials produced by the crop, fishery and livestock sectors. This is the area that will be 
considered in this conference, the 11th one to be hosted by the FAO Biotechnology Forum since it was 
launched in March 2000. It is an area that receives relatively little attention from the media, but which is 
very important for food security in many developing countries.
Biotechnology in the food processing sector targets the selection and improvement of microorganisms with 
the objectives of improving proc ess control, yields and efficiency as well as the quality, safety and 
consistency of bioprocessed products. Microorganisms or microbes are generic terms for the group of living 
organisms which are microscopic in size, and include bacteria, yeasts and moulds.
Fermentation is the process of bioconversion of organic substances by microorganisms and/or enzymes 
(complex proteins) of microbial, plant or animal origin. It is one of the oldest forms of food preservation which 
is applied globally. Indigenous fermented foods such as bread, cheese and wine, have been prepared and 
consumed for thousands of years and are strongly linked to culture and tradition, especially in rural 
households and village communities. It is estimated that fermented foods contribute to about one-third of the 
diet worldwide.
During fermentation processes, microbial growth and metabolism (the biochemical processes whereby complex 
substances and food are broken down into simple substances) result in the production of a diversity of 
metabolites (products of the metabolism of these complex substances). These metabolites include enzymes 
which are capable of breaking down carbohydrates, proteins and lipids present within the substrate and/or 
fermentation medium; vitamins; antimicrobial compounds (e.g. bacteriocins and lysozyme); texture-forming 
agents (e.g. xanthan gum); amino acids; organic acids (e.g. citric acid, lactic acid) and flavour compounds 
(e.g. esters and aldehydes). Many of these microbial metabolites (e.g. flavour compounds, amino acids, 
organic acids, enzymes, xanthan gums, alcohol etc.) are produced at the industrial level in both developed 
and developing countries for use in food processing applications. A considerable volume of current research 
both in academia and industry targets the application of microbial biotechnology to improve the production, 
quality and yields of these metabolites.
Fermentation is globally applied in the preservation of a range of raw agricultural materials (cereals, roots, 
tubers, fruit and vegetables, milk, meat, fish etc.). Commercially produced fermented foods which are 
marketed globally include dairy products (cheese, yogurt, fermented milks), sausages and soy sauce. Certain 
microorganisms assoc iated with fermented foods, in particular strains of the Lactobacillus species, are 
probiotic i.e. used as live microbial dietary supplements or food ingredients that have a beneficial effect on 
the host by influencing the composition and/or metabolic activity of the flora of the gastrointestinal tract. 
Probiotic bacterial strains are also produced and commercially marketed in many developed countries.
In developing countries, fermented foods are produced primarily at the household and village level, where 
they find wide consumer acceptance. Food fermentations contribute substantially to food safety and food 
security, particularly in the rural areas of many developing countries. Traditional fermentation processes used 
in the production of these foods are uncontrolled and are dependent on microorganisms from the environment 
or the fermentation substrate for initiation of the fermentation processes. Such proc esses, therefore, result 
in products of low yield and variable quality. Microorganisms and metabolic pathways assoc iated with the 
production of fermented foods are the subject of considerable research, targeting strain isolation and 
identification; improvement of the efficiency of fermentation proc esses and the quality, safety and 
consistency of fermented foods. Much of this research incorporates the use of genetic technologies for strain 
development and improvement, and for diagnostic studies.
While microorganisms are beneficial in most fermentation proc esses, some may pose the risk of food 
contamination and can cause food-borne illness. Diagnostic methodologies which integrate the use of 
molecular genetic techniques, enhance the speed and sensitivity of microbial testing and are increasingly 
being applied in developing countries.
In conferences hosted by the FAO Biotechnology Forum, clearly defined topics of relevance to agricultural 
biotechnology in developing countries are discussed for a limited amount of time. The topic here is the 
application of biotechnology to the processing of food (including beverages) produced from 
agriculture. This e-mail conference discusses biotechnological tools and options that are applicable to the 
study and improvement of microorganisms which offer potential for improving the quality, safety and 
consistency of fermented foods; improving efficiency in the production of fermented foods, food ingredients, 
food additives and food processing aids (enzymes); diversifying the outputs of fermentation processes and, 
finally, improving diagnostic and identification systems applicable to foods. Applications of biotechnology to 
plants or animals to improve their food processing properties (e.g. development of the Flavr Savr tomato 
variety, genetically modified to reduce its ripening rate) or to produce proteins from genetically modified (GM) 
microorganisms to improve plant or animal production (e.g. production of bovine somatotropin (BST), a 
hormone increasing milk production in dairy cows, by GM bacteria) are not considered here. Finally, the 
conference topic covers applications of biotechnology to processing of food and not to processing of nonfood agricultural products (e.g. timber) or to applying biotechnology to microorganisms for environmental 
purposes (bioremediation, biofuels etc.).
2. Current Status of Biotechnology in Food Processing
2.1 Biotechnology in food fermentation
Microorganisms are an integral part of the processing system during the production of fermented foods. 
Microbial cultures can be genetically improved using both traditional and molecular approaches, and 
improvement of bacteria, yeasts and moulds is the subject of much academic and industrial research. Traits 
which have been considered for commercial food applications in both developed and developing countries 
include sensory quality (flavour, aroma, visual appearance, texture and consistency), virus (bacteriophage) 
resistance in the case of dairy fermentations, and the ability to produce antimicrobial compounds (e.g. 
bacteriocins, hydrogen peroxide) for the inhibition of undesirable microorganisms. In many developing 
countries, the foc us is on the degradation or inactivation of natural toxins (e.g. cyanogenic glucosides in 
cassava), mycotoxins (in cereal fermentations) and anti-nutritional factors (e.g. phytates).
2.1.1 Traditional approaches
Traditional methods of genetic improvement such as classical mutagenesis and conjugation have been the 
basis of industrial starter culture development in bacteria (a culture used to start a food fermentation is 
known as a starter culture), while hybridisation has been used in the improvement of yeast strains which are 
widely applied industrially in baking and brewing applications.
a) Classical mutagenesis
This involves the production of mutants by the exposure of microbial strains to mutagenic chemicals or 
ultraviolet rays to induce changes in their genomes. Improved strains thus produced are selected on the 
basis of specific properties such as improved flavour-producing ability or resistance to bacterial viruses. Such 
mutants may, however, show undesirable secondary mutations which can influence the behaviour of cultures 
during fermentation.
b) Conjugation
This is a natural process whereby genetic material is transferred among closely related microbial species as a 
result of physical contact between the donor and the recipient microorganism. Conjugational gene exchange 
allows both plasmid-loc alised and chromosomal gene transfer (a plasmid is a circular self-replicating nonchromosomal DNA molecule found in many bacteria, capable of transfer between bacterial cells of the same 
species, and oc casionally of different species).
c) Hybridisation (i.e. sexual breeding or mating)
Sexual reproduction in yeasts, and thus genetic recombination, has led to improvements in yeasts. For 
example, crossing of haploid yeast strains with excellent gassing properties and with good drying properties 
could yield a novel strain with both good gassing and drying properties.
2.1.2 Molecular approaches
a) Genetic modification
Recombinant DNA approaches have been used for genetic modification of bacterial, yeast and mould strains 
to promote expression of desirable genes, to hinder the expression of others, to alter specific genes or to 
inactivate genes so as to bloc k specific pathways. The successful application of genetic modification for food 
bioprocessing applications requires the development and use of food grade vectors, i.e. plasmids which do 
not contain antibiotic resistance genes as markers and which consist of DNA sequences from microorganisms 
which are generally recognised as safe (GRAS).
GM yeasts appropriate for brewing and baking applications have been approved for use (e.g. approval was 
granted in the United Kingdom for use of a GM yeast (Saccharomyces cerevisiae) in beer production, 
containing a transferred gene from the closely related Saccharomyces diastaticus, allowing it to better utilise 
the carbohydrate present in conventional feedstoc ks). None of these GM yeasts are, however, used 
commercially.
b) Genetic characterisation
The genetic characterisation of microbial strains through the use of molecular diagnostic techniques can 
contribute tremendously to the understanding of fermentation proc esses. Molecular diagnostics provide 
outstanding tools for the detection, identification and characterisation of microbial strains for bioprocessing 
applications and for the improvement of fermentation processes. The application of these and other related 
techniques, along with the development of molecular markers for bacterial strains, greatly facilitates 
understanding of the ecological interactions of microbial strains, their roles, succession, competition and 
prevalence in food fermentations and allows the correlation of these features to desirable quality attributes 
of the final product.
c) Genomics
In recent years, the genome sequences of many food-related microorganisms have been completed (e.g. 
Saccharomyces cerevisiae, commonly known as baker's or brewer's yeast, was the first eucaryote to have 
its genome sequenced - in 1996) and large numbers of microbial genome sequencing projects are also 
underway (see e.g. http://www.ncbi.nlm.nih.gov/entrez/query.fcgi?db=Genome for an update). Functional 
genomics, a relatively new area of research, aims to determine patterns of gene expression and interaction in 
the genome, based on the knowledge of extensive or complete genomic sequence of an organism. It can 
provide an understanding of how microorganisms respond to environmental influences at the genetic level 
(i.e. by expressing specific genes) in different situations or ecologies, and should therefore allow adaptation 
of conditions to improve technological processes. For a range of microorganisms, it is now possible to observe 
the expression of many genes simultaneously, even those with unknown biological functions, as they are 
switched on and off during normal development or while an organism attempts to cope with pathogens or 
changing environmental conditions. For example, a recent paper by Cooper and colleagues (2003, available at 
(http://www.pubmedcentral.nih.gov/articlerender.fcgi?artid=298728) describes their use of DNA macroarrays 
to analyse expression of all 4,290 genes of the model bacterium Escherichia coli after 20,000 generations of 
evolution in a glucose-limited medium. Functional genomics can, for example, shed light on common genetic 
mechanisms which enable microorganisms to use certain sugars during fermentation, as well as on genetic 
differences allowing some strains to perform better than others. It holds great potential for defining and 
modifying elusive metabolic mechanisms used by microorganisms. Moving from the gene to the protein level, it 
should also be mentioned that proteomics, an approach aiming to identify and characterise complete sets of 
protein, and protein-protein interactions in a given species, is also a very active area of research which 
offers potential for improving fermentation technologies.
2.2 Biotechnology in the production of enzymes
Enzymes are biological catalysts used to facilitate and speed up metabolic reactions in living organisms. They 
are proteins and require a specific substrate on which to work. Their catalysing conditions are set within 
narrow limits, e.g. optimum temperature, pH conditions and oxygen concentration. Most enzymes are 
denatured at temperatures above 42°C. However, certain bacterial enzymes are tolerant to a broader 
temperature range. Enzymes are essential in the metabolism of all living organisms and are widely applied as 
processing aids in the food and beverage industry.
In the past, enzymes were isolated primarily from plant and animal sources, and thus a relatively limited 
number of enzymes were available to the food processor at a high cost. Today, bacteria and fungi are 
exploited and used for the commercial production of a diversity of enzymes. Several strains of microorganisms 
have been selected or genetically modified to increase the efficiency with which they produce enzymes. In 
most cases, the modified genes are of microbial origin, although they may also come from different kingdoms. 
For example, the DNA coding for chymosin, an enzyme found in the stomach of calves, that causes milk to 
curdle during the production of cheese, has been successfully cloned into yeasts (Kluyveromyces lactis), 
bacteria (Escherichia coli) and moulds (Aspergillus niger var. awamori). Chymosin produced by these 
recombinant microorganisms is currently commercially produced and is widely used in cheese manufacture.
The industrial production of enzymes from microorganisms involves culturing the microorganisms in huge tanks 
where enzymes are secreted into the fermentation medium as metabolites of microbial activity. Enzymes thus 
produced are extracted, purified and used as processing aids in the food industry and for other applications. 
Purified enzymes are cell free entities and do not contain any other macromolecules such as DNA.
Genetic technologies have not only improved the efficiency with which enzymes can be produced, but they 
have increased their availability, reduced their cost and improved their quality. This has had the beneficial 
impact of increasing efficiency and streamlining processes which employ the use of enzymes as proc essing 
aids in the food industry.
In addition, through protein engineering, it is possible to generate novel enzymes with modified structures 
that confer novel desired properties, such as improved activity or thermostability or the ability to work on a 
new substrate or at a higher pH. Directed evolution is one of the main methods currently used for protein 
engineering. This technique involves creating large numbers of new enzyme variants by random genetic 
mutation and subsequently screening them to identify the improved variants. This proc ess is carried out 
repeatedly, thus mimicking natural evolution processes.
2.3 Biotechnology in the production of food ingredients
As described in the Introduction, flavouring agents, organic acids, food additives and amino acids are all 
metabolites of microorganisms during fermentation processes. Microbial fermentation processes are therefore 
commercially exploited for production of these food ingredients. Metabolic engineering, a new approach 
involving the targeted and purposeful manipulation of the metabolic pathways of an organism, is being widely 
researched to improve the quality and yields of these food ingredients. It typically involves alteration of 
cellular activities by the manipulation of the enzymatic, transport and regulatory functions of the cell using 
recombinant DNA and other genetic techniques. Understanding the metabolic pathways assoc iated with these 
fermentation processes, and the ability to redirect metabolic pathways, can increase production of these 
metabolites and lead to production of novel metabolites and a diversified product base.
2.4 Biotechnology in diagnostics for food testing
Many of the classical food microbiological methods used in the past were culture-based, with microorganisms 
grown on agar plates and detected through biochemical identification. These methods are often tedious, 
labour-intensive and slow. Genetic based diagnostic and identification systems can greatly enhance the 
specificity, sensitivity and speed of microbial testing. Molecular typing methodologies, commonly involving the 
polymerase chain reaction (PCR), ribotyping (a method to determine homologies and differences between 
bacteria at the species or sub-species (strain) level, using restriction fragment length polymorphism (RFLP) 
analysis of ribosomal ribonucleic acids (rRNA) genes) and pulsed-field gel electrophoresis (PFGE, a method of 
separating large DNA molecules that can be used for typing microbial strains), can be used to characterise 
and monitor the presence of spoilage flora (microbes causing food to become unfit for eating), normal flora 
and microflora in foods. Random amplified polymorphic DNA (RAPD) or amplified fragment length polymorphism 
(AFLP) molecular marker systems can also be used for the comparison of genetic differences between 
species, subspecies and strains, depending on the reaction conditions used. The use of combinations of 
these technologies and other genetic tests allows the characterisation and identification of organisms at the 
genus, species, sub-species and even strain levels, thereby making it possible to pinpoint sources of food 
contamination, to trace microorganisms throughout the food chain or to identify the causal agents of 
foodborne illnesses. Monoclonal and polyclonal antibodies can also be used for diagnostics, e.g. in enzymelinked immunosorbent assay (ELISA) kits.
Microarrays are biosensors which consist of large numbers of parallel hybrid receptors (DNA, proteins, 
oligonucleotides). Microarrays are also referred to as bioc hip, DNA chip, DNA microarray or gene arrays and 
offer unprecedented opportunities and approaches to diagnostic and detection methods. They can be used 
for the detection of pathogens, pesticides and toxins and offer considerable potential for facilitating process 
control, the control of fermentation processes and monitoring the quality and safety of raw materials.
3. Some Issues Relevant to Developing Countries
This conference deals with the application of biotechnology to food processing in developing countries. 
Biotechnological research as applied to bioprocessing in the majority of developing countries, targets 
development and improvement of traditional fermentation processes. In this section, we consider some areas 
specifically relevant to developing countries and list some key issues that should be considered by 
participants in this conference. 
3.1 Socio-economic and cultural factors
Traditional fermentation processes employed in most developing countries are low input, appropriate food 
processing technologies with minimal investment requirements. They make use of loc ally produced raw 
materials and are an integral part of village life. These processes are, however, often uncontrolled, 
unhygienic and inefficient and generally result in products of variable quality and short shelf lives. Fermented 
foods, nevertheless, find wide consumer acceptance in developing countries and contribute substantially to 
food security and nutrition.
- How will applications of biotechnology to fermented foods impact on these socio-economic and cultural 
factors?
3.2 Infrastructural and logistical factors 
Physical infrastructural requirements for the manufacture, distribution and storage (e.g. by refrigeration) of 
microbial cultures or enzymes on a continuous basis is generally available in urban areas of many developing 
countries. However, this is not the case in most rural areas of developing countries.
- Should research be oriented to ensure that individuals at all levels can benefit from applications of 
biotechnology in food fermentation proc esses, i.e. should logistical arrangements for starter culture 
development be integrated into biotechnological research targeting improvement of traditional fermentations? 
What is required for the level of fermentation technologies and process controls to be upgraded in order to 
increase efficiency, yields and the quality and safety of fermented foods in developing countries?
3.3 Nutrition and food safety
Fermentation proc esses enhance the nutritional value of foods through the biosynthesis of vitamins, essential 
amino acids and proteins, through improving protein and fibre digestibility; enhancing micronutrient 
bioavailability and degrading antinutritional factors. Many bacteria in fermented foods also exhibit functional 
properties (probiotics).
The safety of fermented food products is enhanced through reduction of toxic compounds, such as 
mycotoxins and cyanogenic glucosides, and production of antimicrobial factors, such as bacteriocins, carbon 
dioxide, hydrogen peroxide and ethanol, which facilitate inhibition or elimination of food-borne pathogens.
- Are the nutritional characteristics (and safety aspects) of fermented foods adequately documented and 
appreciated in developing countries? Is there a need for consumer education about the benefits of fermented 
foods?
3.4 Intellectual property rights (IPRs)
The processes used in the more advanced areas of agricultural biotechnology tend to be covered by IPRs and 
these rights tend to be owned by parties in developed countries. This applies also to biotechnology proc esses 
used in food processing. On the other hand, many of the traditional fermentation processes applied in 
developing countries are based on traditional knowledge.
In addition to biotechnology processes, microbial strains may also be the object of IPRs. For example, an era 
of massive private investment in biotechnology was initiated when the United States Supreme Court ruled in 
1980 (in the Diamond versus Chakrabarty case) that a live GM bacterium (of the genus Pseudomonas, 
modified to degrade components of crude oil) could be patented. Many of the microorganisms assoc iated with 
traditional fermentation processes in developing countries are unique. Issues of ownership will become 
increasingly important as bacterial strains are characterised and starter cultures are developed in developing 
countries.
- How should food scientists, researchers, industry and governments in developing countries approach these 
issues?
- A considerable volume of research into the development and improvement of fermentation processes is 
currently taking place worldwide. Are the research results from developing countries adequately documented? 
Who owns this information? Are cell banks being developed to protect microbial strains characterised in 
developing countries?
3.5 Commercial opportunities
Biotechnological innovations have greatly assisted in industrialising production of certain indigenous fermented 
foods. Indonesian tempe and Oriental soy sauce are well known examples of indigenous fermented foods that 
have been industrialised and marketed globally. The results of biotechnology research will lead to fermented 
foods of improved quality, safety and consistency.
- Should biotechnology developments in developing countries target commercialisation? Should they target 
diversification into new value-added products? Should biotechnology development be linked to technological 
developments in food proc essing?
- Can the application of biotechnology to food processing allow farmers in developing countries to add value 
to their agricultural products (for export or for loc al consumption) and improve their revenues?
3.6 Appropriateness of food processing biotechnology in developing countries
As with any commitment of resources, investments in biotechnology for food processing should be weighed 
up against other potential uses of these resources in developing countries.
- How relevant and worthwhile can such investments be for developing countries?