Food processing units escape drought — CII

NEW DELHI APRIL 15. The worst drought in 15 years has not adversely affected the food processing industry. The processed food sectors have registered moderate growth.

This is the key finding of the latest quarterly survey conducted by the Confederation of Indian Industry (CII) Agriculture Council, which comprises affiliated associations related to agriculture, agribusiness companies, and financial institutions.

The survey which looked at a dozen sectors including alcoholic beverages, biscuits, edible oil, fertilizers, sugar machinery, tea, and tractors covers the 12 months ended March 2003, which is compared over the previous 12 months.

The Central Statistical Organisation estimated that last year's drought had resulted in agricultural output falling by 3.1 per cent. This survey of the Agriculture Council confirms that the drought has affected input suppliers like tractors and fertilizers, but the output suppliers such as beer, biscuits, edible oil, processed food have still grown, and in some of these sectors, the growth has been faster than the previous year's growth.

The processed food industry, whose sales rose by 8 per cent, was the only one that saw still higher sales of 9 per cent in the previous year. Edible oil production rose by 12 per cent, compared to 1.5 per cent in the previous year. Within this category, there was a mixed picture, with soya oil production falling by 25 per cent, whereas sunflower oil rose by 37 per cent. Vanaspati was the only processed food sector that saw a drop in output by 5 per cent; although in the previous year, production had fallen by another 23 per cent.

Input suppliers, however were severely affected by the drought and other factors. The tractor industry was the worst hit, with sales falling by 20 per cent and production by 23 per cent.

Fertilizer sales fell by 12 per cent, compared to a rise of 3.5 per cent in the previous year. Nitrogenous fertilizer sales fell by 15 per cent and phosphatic fertilizer sales fell by 20 per cent.

The production of sugar machinery rose by 6.5 per cent; however, last year the production had increased by 8.5 per cent.

This year, except one, all other sectors have a positive outlook over the next six months. Only the edible oils sector expects production to drop.

One reason for the processed food sector to continue to grow in the face of the drought is that there was enough stock of cereals and other commodities last year that allowed processors to continue their business.

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