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Agro & Food Processing Sector Profile

Karnataka

Lead Organiser

Knowledge Partner

Event Partner

Index
Global scenario India scenario Transactions & Foreign Direct Investments in the sector Sector overview & value proposition for investors Existing & proposed agri-infrastructure Policies and key government initiatives Centers of excellence Key players Investment opportunities Shelf of projects Key contacts

Agriculture & Food Processing Sector Profile

Agro - Food Processing sector


Global scenario
The Global Processed Food Industry is valued at US $ 3.2 The food processing sector has seen substantial growth in developing economies with increase in GDP, per capita trillion and accounts for over 3/4th of global food sales. income and the resultant changes in lifestyle. Despite the large size of the industry, only 6% of the processed food is traded the world over as compared to bulk agricultural Organized retailing and availability of better processing technologies too have contributed to the accelerated commodities where 16% of produce is traded. growth of the sector. Growth of the sector has been the highest in developed economies, especially across Western Europe, North America, Japan and Australia. USA is the single largest consumer of processed food and accounts for 31% of global sales.

Indian Scenario
With GDP contribution of 15%, agriculture is a key economic driver in India. It is the second-largest producer of food in the world and spends more than a quarter of its expenditure on food and related items. Agriculture services attracted foreign direct investment (FDI) worth US$1440 million (INR 69,124.8 million) between April 2000 to January 2012. Indian food industry is estimated to grow from the present US$181 billion (INR 8688 billion) to US$318 billion (INR 15264 billion) by 2020. The food processing sector in India has potential of attracting US$33 billion (INR1,584 billion) of investments in 10 years and generate employment of 9 mn persondays.

Performance of Exports in Agriculture

Exports in Food Processing Industry

Year

Year
Source: India Brand Equity Foundation

Agriculture & Food Processing Sector Profile

Transactions & Foreign Direct Investments in the sector


M & A data of India (2011) Agro & Food
Target Name
Rexam HTW Beverage Can(India) Ltd Sadashiva Sugars Ltd Capital Foods Exportts Pvt Ltd Jay Mahesh Sugar Industries Ltd Dowamara Tea Co Pvt Ltd MVS farm Pvt Ltd Confidence Trading Co Ltd Sovereign Distilleries Ltd

Target country
India India India India India India India India

Acquirer
Rexam Beverage Can(India Holding)Ltd EID Parry(India)Ltd Future Ventures India Ltd NSL Sugars Ltd Dhunseri Petrochem & Tea Ltd Mumbai Angels Taranya Project Pvt Ltd United Spirits Ltd

Stake(%)
12.91 23.77 14.20 100.00 100.00 25.00 73.00 41.50

foreign direct investment (Fdi)


Cumulative FDI inflows (Period: April 2000 to January 2012)
Sector
Agriculture Services Food Processing Industries Fermentation Industries Vegetable Oils And Vanaspati Sugar Total

INR crore
6,912.48 6,324.11 4,480.65 1,300.77 174.64 19,192.65

US$ million
1440 1318 933 271 36 3998

Source: Fact Sheet On Foreign Direct Investment (FDI), Department of Industrial Policy and Promotion website, www.dipp.nic.in.

Agriculture & Food Processing Sector Profile

Agriculture and food processing: backbone of Karnatakas economy


Karnatakas
Leading Producer:

Value Proposition for investors


Diverse competencies
Leader in horticultural products and spices Accounts for over 20% of floriculture production in India One of the largest producers of Cashew nut in India accounting for 8.5% of national production 320 km coastline yields annual marine production of 425,000 MT

Large resource base: Karnataka has over 64% of its total


geographical area under agriculture cultivation Largest spices, aromatic, medicinal crops, tropical fruits producing state, second-largest milk producing state, third and fourth largest producer of sugar and sugarcane, respectively.

Significant Production:

Karnataka accounts for 70% of coffee, 8.4% of total fruits and 6.2% of total vegetables produced in the country for Maize, Coarse Cereals, Sugarcane, Pulses and Sunflower in the country

Export Growth
Exports in Coffee have increased from US$ 147 million (INR 7060 million) in 2004-05 to US$ 201 million (INR 9650 million) in 2009-10 Exports in Marine products & Spices grew by CAGR of 43% and 29% respectively between 2004-05 and 2009-10

Major producer

Strong input base:

Agriculture & allied activities contributed 17% to GSDP in FY09

Karnatakas share of national produce National Rankings


Plantation crops Fruits Coffee (1st), Areca nut (1st), Cocoa (1st ), Coconut (3rd) Sapota (1st), Grape (2nd), Pomegranate (2nd), Mango (3rd), Papaya (3rd), Pineapple (3rd)

Agriculture & Food Processing Sector Profile

Horticulture & Sericulture: leading national supplier of crops and silk


Horticulture: Karnataka ranks 5th in India in terms of total area under horticulture
Largest producer of coffee and cocoa in the country 2nd largest production of flowers; 2nd largest producer of grapes 3rd largest producer of plantation crops in India accounting for 11.6% of the national production 4th largest producer of spices, accounting for 8.6% of the national production 5th largest producer of fruits in the country International Flower Auction Bangalore Ltd. (IFAB) home to the first and largest international flower auction company in Asia

Export performance of Agriculture and Processed Food Products in Karnataka

Source: Indian Horticulture Database 2010

Sericulture: Karnataka leads in the exports of silk in India with approximately 25% of total Indian export market
Leads the country with 25%, 7,388 MT, of the total silk produce in 2010-11 Karnataka has 62,697 hectares of land under Mulberry plantation Mulberry cultivation concentrated in Mandya, Ramnagaram, Kolar, Chikkaballapur, Bangalore and Tumkur districts Climatic conditions in Karnataka favor Sericulture practice throughout the year 66 cocoon markets and 10 silk exchanges to regulate trade Cocoon Market at Ramanagaram is one of the largest cocoon markets in Asia

Increase in Sericulture

Share of exports of Sericulture in Karnataka

Year

Year

Source: Bounteouskarnataka

Agriculture & Food Processing Sector Profile

Infrastructure: driving states agriculture and food processing industries


Food parks and food processing Special Economic Zones(SEZ) demonstrate investor interest and industry efforts to increase influence of agriculture and food processing sectors on states economy

Location
Existing Food Parks
Malur (Kolar) Navanagar (Bagalkot) Hiriyur (Chitradurga) Jewargi (Gulbarga)

Area (acres)

Operational & Formally approved SEZ Proposed Food parks Proposed Food Proposed Spice parks Foodparks parks Food parks Proposed Spice parks Proposed Spice Spiceparks parks Proposed Food parks Proposed Spice parks Existing Food parks

87 100 106 105

Agri-food processing SEZ


Hassan 115

Bijapur Belgaum Bagalkot

Proposed Food Parks under PPP mode


Belgaum Bijapur Bangalore Rural Shimoga Tumkur 100 75 100 100 100

Haveri Davanagere Shimoga Chitradurga Chikkamagalur Tumkur Hassan

Proposed Spice Park


Haveri 100

Warehousing Agency in Karnataka


Central Warehousing Corporation Karnataka State Warehousing Corporation Food Corporation of India Others Total

Total units
38 123 52 -

Storage Capacity in (Million MT)


1458 2310 1313 898 5979

Agriculture & Food Processing Sector Profile

Agri Investment Region


Agri investment region aims at :
streamlining agricultural value chain bringing state of art technology encouraging best practices in agri business reducing transaction costs & Improving realization for farmers.

Operational & Formally approved SEZ Proposed Food parks Proposed Spice parks Existing Food parks

Gulbarga Bijapur Belgaum Bagalkot

Proposed components of the Agri-Investment Regions


Infrastructure: SEZ, agro & food parks, warehouse, logistic hub, residential development Major themes: Agriculture-Horticulture, Animal Husbandry, Fisheries, Sericulture, Apiculture, Food Processing, Agri Engineering, Biotechnology, Agri research Infrastructure development within the development node: Internal roads, site grading, sewage treatment plant, power distribution etc.

Haveri Davanagere Shimoga Chitradurga Chikkamagalur Tumkur Hassan

Kolar

Specialized infrastructure proposed: Post harvest infrastructure, primary processing centres, modern terminal markets, quality control labs Major industrial opportunities: Agri input, Agri-engineering, hi-tech cultivation under controlled climatic condition, vegetable and food processing, spice products, diary products, animal product, beverage & soft Drinks

Crops
Sugarcane Arecanut Cashew nut Cocoa
Pepper Groundnut

Main production districts


Mandya, Mysore, Chamarajanagar, Belgaum, Bijapur, Bagalkot Shimoga, Dakshin Kannada, Tumkur, Devanagere, Chikmagalur, Uttara Kannada Dakshin Kannada, Udupi,Kodagu,Chikkaballapura Dakshin Kannada, Hassan, Mandya, Chikmagalur Kodagu, Hassan, Chikmagalur, Dakshin Kannada, Shimoga Tumkur, Chitradurga, Bellary, Gadag, Belgaum, Koppal

Agriculture & Food Processing Sector Profile

Policies: facilitating investments and growth in industries


Budget 2012-2013, Agriculture Outlay of US$4095.83 million (INR 196.6 billion) for the development of agriculture, allied and irrigation sectors. Outlay of US$608.54 million (INR 29.21 billion) for various activities of the Agriculture Department Outlay of US$109.17 million (INR 5.24 billion) for strengthening of Agriculture, Horticulture and Animal Husbandry universities in the state. Outlay of US$41.67 million (INR 2000 million) to be provided for organic farming A Tur Technology park in Gulbarga district, Maize Technology Park at Ranebennur, and a Coconut Technology Park in Tumkur district have been proposed An Oceanarium of international standard is proposed at Mangalore under public private partnership Integrated Agribusiness Development Policy 2011 Exemption from Stamp Duty & Concessional Registration for MSME, Large and Mega agro based industries and agri-infrastructure. Exemption from Entry Tax, Exemption of APMC cess / fees and Incentives for Export Oriented units. Interest Free Loan on VAT for Large and Mega agro based industries. Exemption from electricity duty for agro units & agri-infrastructure. Special incentives in selected zones. Karnataka Grape Processing and Wine Policy, 2007 Declaration of Wineries as Horticultural & Food Processing Industries . Simplification of rules for getting lands for production of grape wine varieties, production of wine and for issuing License and Permit to the Wineries. Capital Investment Subsidy and Subsidy for Grape Processing. Incentives for marketing and distribution of wines and establishment of Wine Parks. Karnataka State Policy on Organic Farming, 2004 Integrated and sustainable management of natural resources for achieving food, nutritional, environmental and livelihood security. Improvement in soil fertility & productivity through safe farming. Efficient, economic, eco-friendly and sustainable crop production and protection technologies.
Other related policies include Karnataka Agriculture policy, Karnataka Horticulture Policy and KarnatakaIndustrial Policy 2009-14

Agriculture & Food Processing Sector Profile

Policies: facilitating investments and growth in industries


Policy & Regulatory framework
100% FDI under automatic route is permissible for the following sectors under Agriculture: Floriculture, Horticulture, Apiculture and Cultivation of Vegetables & Mushrooms under controlled conditions Development and production of Seeds and planting material Animal Husbandry (including breeding of dogs), Pisciculture, Aquaculture, under controlled conditions and services related to agro and allied sectors. Besides the above, FDI is not allowed in any other agricultural sector/activity Any import of genetically modified materials if required shall be subject to the conditions laid down vide Notifications issued under Foreign Trade (Development and Regulation) Act, 1992.

Investment Guidance
Karnataka Udyog Mitra (KUM): First contact point for all investors in Karnataka and nodal agency to facilitate investments. KUM executes initiatives to enable smooth transition from investment proposal stage to implementation stage State High Level Clearance Committee(SHLCC): Chaired by Honorable Chief Minister of State of Karnataka to approve projects with investments above US$ 10.42 million (INR 500 million) State Level Single Window Clearance Committee(SLSWCC): Chaired by Honorable Minister for Large and Medium Industries meets every month to approve projects with investments between US$ 0.63 million (INR 30 million) and US$ 10.42 million (INR 500 million) District Level Single Window Clearance Committee (DLSWCC): Chaired by Deputy Commissioner of the District , for approval of projects with investments up to US$ 0.63 million (INR 30 million) Combined Application Form: Available on KUM website for obtaining required statutory approvals

International Case Study - Nestle


Nestl India set up its first factory in Karnataka at Nanjangud, Mysore district, in 1989. Subsequently it set up its Instant Noodles & Mixed Condiments & Seasonings plant in Karnataka in the year 2010 at an investment of US$ 72.76 million (INR 349.23 crore) [This project was implemented within a short span of 8 months only]

Agriculture & Food Processing Sector Profile

Centers of excellence: driving innovation in agriculture and allied industries


Prominent Agricultural & Horticultural Institutes
Institutes Location
Area of research
All aspects of agricultural sciences, nondiploma courses in baking and other training courses in mushroom cultivation, nursery management Bachelors or Masters degree in an in Agriculture & Veterinary Sciences, Centre For Reproductive Biology Developing strategies to enhance productivity and utilization of tropical and sub tropical horticulture crops viz., fruits, vegetables, ornamentals, medicinal and aromatic plants and mushrooms. College offers M.Tech (Ag.Engg) programmes with specialization in Soil and Water Engineering, Farm Power & Machinery and Agri-Processing & Food Engineering Development of new crop varieties, cultivation packages, crop protection methods

University of Agricultural Sciences College of Agriculture

Bangalore, Shimoga, Mandya, Hassan, Dharwad

Indian Institute of Sciences

Bangalore

Indian Institute of Horticultural Research

Bangalore

College of Agricultural Engineering

Raichur

University of Horticultural Sciences

Bagalkot

Prominent Research & Development Institutes


Institutes
Central Food Technological Research Institute (CFTRI) The Karnataka Veterinary, Animal and Fisheries Sciences University (KVAFSU), University of Horticulture

Location
Mysore

Area of research
Food science and technology

Bidar

Veterinary and animal sciences, dairy sciences, fisheries and other allied sciences Dairy Microbiology ,Dairy Chemistry . Dairy Technology Dairy Engineering. Animal Biochemistry Animal Biotechnology, Animal Genetics & Breeding 8. Livestock Production & Management Animal Nutrition, Animal Physiology, Dairy Economics Food R& D Large scale production of FMD virus vaccine and conducts basic and applied research on FMD

National Dairy Research Institute (NDRI)

Bangalore

Defence Food Research Laboratory (DFRL)


Indian Veterinary Research Institute (IVRI)

Mysore Bangalore

Agriculture & Food Processing Sector Profile

Investments: driving sector growth and states position in global markets


Key Agro Food Sector Projects in Karnataka Key investors
Cargill India Pvt. Ltd.

Activities
Starch liquid, Glucose, Malto-Dextrin, Dextrose, Sorbitol Instant Noodles & Mixed Condiments & Seasonings Instant Noodles

Project Location
Haveri

Nestle India Ltd

Mysore

Indo Nissin Foods Limited

Ramanagara

English Indian Clays Ltd.

Maize processing

Shimoga

Hindustan Coca-Cola Beverages Pvt. Ltd.

Aerated soft drinks, Fruit juices & Packed drinking water Private Wholesale market for Fruits & Vegetables Maize Starch & Modified Starch, Liquid Glucose, High Malto Corn Syrup, Malto Dextrin, Dextrose, etc. Biscuits & Bakery Products, R &D Centre

Bangalore Rural

Hassan

Premium Farm Fresh Produce Ltd

Haveri

Gujarat Ambuja Exports Ltd.

Bangalore Rural

Britannia Industries Ltd.

Sugar plant
Shree Renuka Sugars Ltd. Nirani Sugar Industries Ltd.

Gulbarga

Sugar plant

Bagalkot

Ugar Sugars

Sugar plant

Belgaum

Pepsico India Holdings Pvt. Ltd.

Non-Alcoholic Beverages, Fruit Juice Based verages, packaged drinking water Packaged food

Bangalore Rural

Bangalore

MTR Foods Pvt. Ltd. Karaturi Globals Ltd.

Flower Exporter

Raichur

Zygo Bonsai Pvt. Ltd.

Flower Exporter

Bangalore

Agriculture & Food Processing Sector Profile

Investment Opportunities
Agriculture and food processing
Agri Ecology Crop nutrition Plant breeding Pollination management Forest and nature conservation Soil conservation Organic agriculture Aseptic packing of fruit pulps concentrate, Ready to serve (RTS), Ready to eat (RTE), Herbal Extracts, Herbal Medicine nutraceuticals, Herbal medicine extraction Value addition to agriculture produce, processing and utilization of by products Integrated Agri-parks and Special Economic Zones

Agri Engineering
Precision machinery for rain fed, irrigation and hill agriculture, livestock, fisheries production Farm productivity improvement machinery, farm mechanization, etc Bio fertilizers, Bio compost units Energy management processing in agriculture and

Dedicated perishable air cargo complex Post-harvest infrastructure ( collection centre, storage house, controlled storage, precooling, Ripening chambers, Modified atmospheric packing & grading, packing house) Transit storage

Horticulture
Agri Ecology Crop nutrition Plant breeding Pollination management Forest and nature conservation Soil conservation Organic agriculture Aseptic packing of fruit pulps concentrate, Ready to serve (RTS), Ready to eat (RTE), Herbal Extracts, Herbal Medicine nutraceuticals, Herbal medicine extraction Value addition to agriculture produce, processing and utilization of by products Integrated Agri-parks and Special Economic Zones

Animal Husbandry Fisheries Food Processing - Sericulture


Precision machinery for rain fed, irrigation and hill agriculture, livestock, fisheries production Farm productivity improvement machinery, farm mechanization, etc Bio fertilizers, Bio compost units Energy management processing in agriculture and

Dedicated perishable air cargo complex Post-harvest infrastructure ( collection centre, storage house, controlled storage, precooling, Ripening chambers, Modified atmospheric packing & grading, packing house) Transit storage

Agriculture & Food Processing Sector Profile

Shelf of projects: agri-infrastructure


Project
Food Park Food Park Food Park Food Park Food Park Food Park Food Park Food Park Food Park Wine Park in Nandi Valley Wine Park in Nandi Valley Wine Park in Nandi Valley Wine Park in Krishna Valley Wine Park in Krishna Valley Wine Park in Krishna Valley Agri-investment Region Agri-investment Region Agri-investment Region

District/ Location
Harohalli Telagi Ittangihala Ittangihala Yadgir Koppal Dharwad Hassan Mysore Bangalore urban Bangalore Rural Kolar Bijapur Bagalkot Belgaum Gadag - Haveri Belgaum Mysore

District

Investment potential (US$ million)


5.87 2.41 4.97 5.96 6.25 6.25 6.25 6.25 6.25 11.46 11.46 11.46 11.46 11.46 11.46 41.67 41.67 41.67

Ramanagara Devangere Bijapur Haveri Yadgir Koppal Hubli-Dharwad Hassan Mysore Bangalore urban Bangalore Rural Kolar Bijapur Bagalkot Belgaum Multi-district Belgaum Mysore

Agriculture & Food Processing Sector Profile

Source:
Department of Commerce & Industries, Government of Karnataka; website: http://www.karnatakaindustry.gov.in/ Karnataka Udyog Mitra (KUM), Government of Karnataka; website: http://www.kumbangalore.com/ Department of Agriculture, Government of Karnataka; website: www. raitamitra.kar.nic.in Department of Horticulture, Government of Karnataka; website: www.horticulture.kar.nic.in Department of Sericulture, Government of Karnataka; website: www.reshmesiri.kar.nic.in Industry: Agriculture India Brand Equity Foundation, November 2011, http://www.ibef.org/industry/agriculture.aspx, accessed on November 19, 2011. Industry: Food Industry India Brand Equity Foundation, November 2011, http://www.ibef.org/industry/foodindustry. aspx accessed on November 19, 2011 Food Processing in India Website of CCI , http://www.cci.in/pdf/surveys_reports/food-processing-india.pdf accessed on November 19, 2011 Area and Production Statistics National Horticulture Board, http://nhb.gov.in/database-2010.pdfIndian Horticulture Database 2010 accessed on 19th November, 2011 Annual Report of Industries & Commerce Dept. for 2010-11, Karnataka Industry, http://karnatakaindustry.gov.in/ documents/Final-Aannual%20Report%202009-2010-Eng.pdf Horticulture Bounteouskarnataka, accessed on 5th December, 2011 Sericulture Bounteouskarnataka, accessed on 5th December, 2011 http://www.bounteouskarnataka.com/FS-PDF/SectorProfile-Horticulture.pdf http://www.bounteouskarnataka.com/FS-PDF/SectorProfile-Sericulture.pdf

KSIIDC, http://www.ksiidc.com/fkl.html accessed on 21st November, 2011 Karnataka State Warehousing Corporation, http://www.karnatakawarehousing.in/kswc_aboutus.asp accessed on 21st November, 2011 SEZ Status; website: http://www.sezindia.nic.in accessed on 21st November, 2011 Agro Investment Region I Belgaum, Bounteouskarnataka, http://www.bounteouskarnataka.com/ProjectprofileAgriBusinessInvestmentRegion-I.pdf accessed on 6th December, 2011 Agro Investment Region II Gadag & Haveri District, Bounteouskarnataka, http://www.bounteouskarnataka.com/ Projectprofile-AgriBusinessInvestmentRegion-II.pdf accessed on 6th December, 2011 Budget 2011-12 Agriculture Bounteouskarnataka, Budget_2011-12.pdf accessed on 5th December, 2011 http://www.bounteouskarnataka.com/Agriculture%20

Integrated Agribusiness Development Policy 2011, Bounteouskarnataka, http://www.bounteouskarnataka.com/ Integrated Agri Business DevelopmentPolicy-2011.pdf accessed on 5th December, 2011

Agriculture & Food Processing Sector Profile

Contacts
Principal Secretary to Government of Karnataka Commerce & Industries Department
# 106, 1st Floor, Vikasa Soudha, Dr. Ambedkar Vedhi, Bangalore - 560 001, India. Ph.: +91-80-22252443 / 22034340 Fax: +91-80-22259870 Email: prs_ci@karnataka.gov.in

Commissioner for Industrial Development and Director of Industries & Commerce


2nd Floor, Khanija Bhavan, No.49, Race Course Road, Bangalore - 560 001, India. Ph.: +91-80-22386796 Fax: +91-80-22389909 Email: commissioner@karnatakaindustry.gov.in Visit us at: www.karnataka.industry.gov.in

Managing Director, Karnataka Udyog Mitra


3rd Floor, Khanija Bhavan (East Wing), No.49, Race Course Road, Bangalore - 560 001, India Ph.: +91-80-2228 2392, 2228 5659, 2238 1232, 2228 6632 Fax: +91-80-2226 6063 Email: md@kumbangalore.com Visit us at: www.kumbangalore.com

No. 17, Richmond Road, Bangalore - 560025, India Ph.: +91-80-22271194 / 22243082 Fax: +91-80-22278974 Email: kappec@dataone.in Visit us at: www.kappec.kar.gov.in

Managing Director Karnataka State Agricultural Produce Processing & Export Corporation Limited (KAPPEC)

Department of Agriculture (www. raitamitra.kar.nic.in) Department of Horticulture (www.horticulture.kar.nic.in) Department of Sericulture (www.reshmesiri.kar.nic.in)

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