India’s growing food processing sector offers real opportunities

Scott S Sindelar Ι Minister Counselor for agricultural affairs, U.S. Embassy, New Delhi
Scott S Sindelar Ι Minister Counselor for agricultural affairs, U.S. Embassy, New Delhi

U.S. India relations are among the most multifaceted and vibrant. Over last few years, the two countries have not only been trading more, they are increasingly cooperating on issues that face both countries. The agricultural cooperation between the India and the U.S. is a true example. Not only are more and more American companies investing in Indian food processing sector, tech and research collaboration between the two countries has also been on the rise. To know more on how the two countries are cooperating in agricultural matters, Anand Mishra, Editor and Rajesh Mehta, Consulting Editor, Governance Today, spoke to Mr. Scott S. Sindelar, Minister Counselor for Agricultural Affairs at the American Embassy in New Delhi. Prior to his assignment in India, Scott served as Minister Counselor at the American Embassy in Beijing and Pretoria.

Edited excerpts:

Could you share your opinion on the collaboration between India and the US in the field of agriculture?

The United States and India have a long history of working together across the entire agriculture value chain, from farm to fork. This is a reflection of the fact that both countries are global leaders in the production of a number of agricultural commodities and food products as well as important players in the global agricultural market. Considering that the world’s population will grow by another 2 billion people over the next 35 years, it is essential that our two countries expand collaboration in the agriculture and food area.

A number of U.S. government agencies, as well as U.S. private sector companies are actively engaged with India across the broad agriculture/food value chain. For example, the U.S. Department of Agriculture (USDA) currently has programs designed to strengthen capacity for agricultural development and trade, with a focus on technical collaboration. These include our Animal and Plant Health Inspection Service working with the Indian National Institute of Plant Health Management (NIPHM) to strengthen India’s quarantine facilities and other pest risk management measures for export crops.

Our Agricultural Research Service is working with its counterparts in India on issues such as food safety, value-added food products and co-products, range land management, genetic resource management and improvement, reduction of livestock diseases, pest and weed management, and genetic approaches to livestock and crop improvement. Also, our Forest Service is collaborating with India’s Ministry of Environment, Forests and Climate Change to promote sustainable ecosystem services. In addition, over the last fifteen years  USDA’s Foreign Agricultural Service has sponsored 154 Indian government officials and private sector representatives for training and exchange visits to the United States through the Cochran Fellowship Program and 109 Indian scientists for joint research projects with U.S. scientists through the Borlaug Fellowship Program.

Processed food sector is a huge area which is yet to fully develop in India. How can US assist in this sector?

We agree that India’s growing food processing sector offers real opportunities and see a viable food processing sector as a boon to rural communities who produce the raw material and are in the best position to capture gains from adding value to these crops.

The Ministry of Food Processing Industries (MOFPI) has an initiative to establish 42 mega food parks across the country, with a goal to increase the level of processed food from the current 10% to 20% in the next few years. Attractive incentives have been established by central and state governments to include capital subsidies, tax rebates, and reduced custom and excise duties. The government is also encouraging disbursement of loans under a priority sector lending scheme to ensure that entrepreneurs have access to credit to set up food processing units. Within these initiatives are opportunities for American companies to provide modern food processing equipment and technologies to India. The U.S. Commercial Service and the U.S. Department of Agriculture have regular contact with large and small players in the U.S. food processing and cold chain sectors. We are actively encouraging U.S.
firms to come to India and explore opportunities in this sector.

In fact, many U.S. food processing companies are already contributing significantly to the Indian food processing sector, with major local investments and operations. Expanding the U.S. food processing footprint in India will depend largely on the interest of U.S. stakeholders. While India obviously has a large domestic market, the domestic policy and regulatory environment that facilitates research and development, investment, the commercialization of market-based solutions, and trade are also critical factors when U.S. stakeholders make commercial and investment decisions. We believe that any food processing industry becomes much more viable when it also has the freedom to procure high-quality, low-cost inputs and ingredients from international suppliers. Using the power of the global market to source critical inputs will help drive quality improvement, make the industry more stable over time, and generate market efficiencies and opportunities around the world.

Other important factors include helping to add infrastructural value. For example, later this year, USDA will sponsor a technical exchange program on post-harvest management under the Norman Borlaug Fellowship Program. The program will focus on issues such as value addition, food packaging, food safety and quality, and post harvest loss prevention.

Climate change has forced weather patterns globally. How can food security be ensured in such an environment?

The Paris Agreement aims to hold “the increase in the global average temperature to well below 2°C above pre-industrial levels” and calls upon countries to make best efforts to limit warming to 1.5 degrees. The second part is particularly important because even if we meet the two degree ceiling, climate scientists estimate that crops yields in the U.S., India, Africa, and elsewhere could decrease by as much as 30 percent. Fortunately there are a few things upon which we can focus in an attempt to limit warming to 1.5 degrees.

  • First, we can aim to push the Paris Agreement into force early. While the formal implementation of the Paris Agreement is from 2020-2030, the agreement actually could go into effect far sooner than that. There is a little noticed provision in the Agreement that says: as soon as 55 countries representing at least 55 percent of global emissions formally join, the Agreement will enter into force.
  • Second, all countries can seek to lock in even more climate ambition now. For example, in December, President Obama worked with Congress to secure a long term extension of tax incentives for renewable energy, such as wind and solar.
  • Third, we can work to ensure the Paris Agreement becomes an enduring and irreversible market force. Just getting an agreement sent a powerful statement that clean energy is the energy of the future. But we can do more by  replicating the White House’s Businesses Act on Climate Pledge. Companies like Abengoa Bioenergy US, Fulcrum Bioenergy, International Paper, and scores more have pledged to demonstrate an ongoing commitment to climate action. One way the U.S. is doing this is by considering how forests, wetlands, and grasslands function as “carbon sinks” to offset emissions elsewhere.

Ultimately, food security in the face of climate change will depend on our ability to adapt to new weather conditions, to develop and adopt innovative agricultural technologies, and to ensure effective, functioning markets that facilitate the production, processing, distribution and trade of agricultural commodities and food products.

Farm sector has been a big area of contention between developing and developed world. How do you think India and the US can work together in this area at forums like WTO?

The United States is prepared to bring its energy and creativity to revitalize negotiations in the WTO. But it is important that at this juncture we take a broad view of potential issues and approaches in our future negotiations. The field is open to new thinking – whether on multilateral, plurilateral or sectoral approaches, or new issues in agricultural altogether. One of the major concerns of developing countries is food security. To address this concern, we must encourage the flow of agricultural and food trade by lowering tariffs and reducing trade barriers. Trade substantially increases food security by making more types of food widely available, increasing a population’s access to food, and allowing food to be available year round.

India and the U.S. have often been at odds as far as farm subsidies are concerned. How can the two solve this issue?

As noted earlier, we are faced with the global challenge of feeding an additional 2 billion people by 2050. The key to a strong international agricultural system that will allow both our countries to help meet the challenge of the expanding global demand for food remains the same: we need a strong, predictable, rules-based agricultural and trade policy system that allows producers to respond to market signals and facilitates trade while ensuring the health and welfare of producers and consumers. Continuing to discuss these issues on a bilateral and multilateral basis is essential.

Agricultural research has been an important aspect of cooperation between the two countries in recent years. Could you throw some light on the initiative?

Our governments are exploring avenues for enhancing our bilateral cooperation on a number of technical issues, to include bioenergy, crop forecasting, biotechnology, climate-smart agriculture, and others. U.S. Land Grant universities and private sector stakeholders are also potential partners for building capacity, expanding technical expertise, and providing high-quality food ingredient and industrial inputs.

In addition to various public and private sector cooperation, the United States and India have also worked well together on international initiatives to raise technical capacity. Last December, USDA and the Ministry of Agriculture’s NIPHM concluded a multi-year collaboration to help prevent the introduction and spread of plant pests globally. Our governments provided phytosanitary training and other services to 474 people, including 81 international participants, from 13 different countries.

What is your opinion about India’s agricultural policy and how you think it could be made more robust?

India is rightly proud of its achievement in becoming a major producer of key cereal and other food crops, especially wheat and rice that allowed the country to overcome the food security challenges it faced 50-60 years ago. Consecutive deficient monsoons, recent price volatility in a number of commodities, growing awareness over agriculture’s impact on India’s water resources, the inevitable transition of farm employment to non-farm jobs and related concerns over the rural economy have focused much-needed attention on India’s current agricultural policies. As a result, it seems to me that India is already on a path to reform and adapt its existing agricultural policies to better reflect the current domestic and global situation and to better meet the needs of India’s citizens. The new crop insurance program, building  a national agricultural market, and encouraging FDI in food processing are all indicators that India is gradually moving toward a more market-oriented agricultural production and distribution system. These and other measures that may follow have the potential to more efficiently allocate India’s natural resources, especially water and land, and to better utilize its human and financial capital in the production of food.