Punjab has always been known as one of the key agricultural states in the country and hence possesses immense potential and scope for setting up food processing industries to uplift the agri-business system.
Further, economic liberalisation, globalisation, and entry of MNCs in processed food segment have tremendously increased the opportunities as well as competition in the market while offering an advantage to customers.
Not only that, modernisation and commercialisation of agriculture in post-GATT era with emphasis on value-added agro-based products for domestic as well as international markets, spell a bright future for Punjab food industry. This study lays emphasis on domestic market, keeping in view the fast changing tastes of consumers and their preference towards processed food products.
Employment generation, industrial growth in clusters, regional development and local sustainability, entrepreneurship, sustainable consumption, low cost of production and flexible manufacturing systems can be counted as inherent strengths of the informal food processing industry in India.
North India, comprising Punjab, Haryana and Himachal Pradesh and parts of J&K, is fast emerging as a hub for food processing industry, thanks to changing lifestyle of its population, growing income of the middle-class and surplus production of fruits, vegetables and milk.
Problems faced during marketing of products
Through rotation of matrix, the first component has high loadings from four problem areas: Government regulations and rates, High tax rates, poor infrastructure to support and high initial cost. Looking at the problem areas, the key factors can be termed as governmental and infrastructural problems.
Varying tastes and preferences, procurement of raw material, lack of awareness on market potential - variables are associated strongly with the second component. As there is uncertainty in consumers’ taste and preferences, raw material supplies and market potential, the factor can be termed Uncertainty.
Distribution related problems, seasonal fluctuations, and variation in export demand are associated strongly with the third component. Looking at the problem areas, the factors can be termed as varying distribution and demand problems.
The fourth component is strongly associated with unavailability of required human resources, and competition with the unorganised sector. Looking at the problem areas, the factor can be termed competition resource.
The fifth component is strongly associated with unethical practices of competition by competitors and middlemen’s attitude. Looking at the problem areas, the factor can be termed as human.
As one goes on, the factors become harder to interpret.
Future prospects - Organised food processing industry
Considering the various problems being faced by the food processing industry and their extent, it is important to discuss the future prospects of the industry in Punjab. It is not to be forgotten that the problems become prospects if they are identified and a suitable decision is taken followed by an appropriate marketing strategy.
The quality of product was figured at top in terms of point considered while making product strategy followed by relationship with customer followed by brand image and time commitment. Low price figured at very low rung of the ladder. National level players covering large territory gave more importance to brand image apart from top priority selling point i.e. quality. For local level or small-scale players, relationship with customer was the biggest point. National players gave least consideration to low-priced tag.
Change in product/ production
Keeping in view the fact that a product line is a group of products that are closely related because they function in almost similar manner are sold to same customer groups are marketed through same type of distribution outlets, or fall within given price ranges. As the processed milk products are perishable in nature as is the raw material itself i.e. milk and hence fluctuations in the product line with respect to season are bound to come. Almost the entire food processing industry follows the trend. With this objective in mind, reactions are sought from selected food processing industries regarding field of change and extent for judging their reactions and decision-making and to watch whether they are watching the movement of the product or not.
Finding and suggesting buyers about new uses of existing products was most significant change followed by looking for new markets, packaging and pricing. Change in flavour/taste came next in the order. It was important to note that change in pricing was least favoured by the marketers. This may be due to the reason that these food items have become necessity or part of daily life, so demand persists. Withdrawal from existing product range figured at last among all changes. The big scale companies gave a lot of weightage to change in market apart from finding new buyers and change in uses of the products. Withdrawal of existing product range was not favourable to local companies.
All companies gave no weightage for change in pricing and very less weightage to change in distribution system. The companies which operate in large geographical areas may change distribution system e.g. shift to refrigerated system.
Change in product/production efficiency due to change in season
To explain the possible reasons responsible for change in product line with respect to their weightage, it was found that all the companies were of the common view that changes in physical conditions like temperature were key. Change in preferred tastes of consumer with regard to particular product became the second-most important reason of seasonal fluctuation felt by the milk processing companies. The consumers’ liking for products like ice cream, flavoured milk, and lassi is more in summer season. Change in level of availability of raw material was another important reason for seasonal changes. As milk yield as well as its nutritional composition (fat/protein content) is greatly affected by atmospheric temperature, availability of type of fodder for the cattle and hence, the supply of milk to the processing unit is also greatly affected.
Consumer’s quantum of consumption with regard to a particular product also changes in different seasons as the liking and suitability changes.
The companies feel that technology requirement in each season and hence cost of processing also varies but gets the least weightage. The important changes in use of technology in each season are regarding distribution and storage, but major technology adopted for processing operations almost remains unchanged irrespective of seasons.
Problems faced during marketing of products
It was observed that milk processing industry feels that ‘government regulation like high tax rates’ was the single-most important problem faced by selected food processing companies, followed by ‘lack of distribution i.e. non-availability of processed food items in comparison to unprocessed food material,’ ‘High initial investment’ and ‘nature of the product itself e.g. low shelf life’ were the next major problems for the industry followed by ‘Unawareness of consumers about quality of processed foods.’ Poor infrastructure was the least important problem considered by the industry.
While talking about the companies, ‘high tax rates’ problem was the common problem for all the companies. Some companies felt that government regulations also impede realisation of their business potential. The companies having large processing volume, were of the view that lack of distribution and consumer’ awareness on quality of unprocessed food are also major problems.
Problems related to seasonal fluctuations
When the officials of selected companies were asked about the various factors related to seasonal changes which affect the performance and functioning of their organisations, cost of transportation was the biggest problem affecting their organisations. As Punjab state is in sub-tropical zone, temperature varies from sub-zero to 40-plus in various seasons, the perishable nature of the food material decreases shelf life. The organisations have to incur more cost on transportation using refrigerated vehicles or ice blocks. The cost is incurred on transportation of raw material as well as finished product to market. By incurring higher cost on refrigeration or chilling by ice, the companies can procure the milk from a wider area and can also distribute in a bigger market.
Moreover, the companies can use vehicles with bigger container capacity, and thus covering large area using more time. Similarly, cost of distribution is another major problem related to seasonal variations. The vendors prefer to keep lesser stocks and want supplies twice a day. The companies, in such cases, need to supply food material at more number of vendors located at distant locations. Cost of storage is another problem related to temperature and Relative Humidity which vary with seasons. Variation in cost of storage in different seasons is caused by refrigeration or chilling of food material.
As costs of transportation, distribution and storage increase or decrease in different seasons, the effect on profitability is obviously an important problem for the milk processing industry. The production capacity utilisation and supply to markets vary from season to season, hence, profitability suffers.
Labour requirements also change with season. It was observed that more labour is required in summer season as supplies are more and hence, more quantity of milk is processed. The procurement of raw material is another significant problem related to seasonal fluctuations.
It was important to observe that the companies do not feel problem in maintaining quality of food material. When further probed, it was observed that food material has standard parameters of quality in terms of fat, proteins, and carbohydrates composition. These standards are either fixed as per some laws or are industry standards. Thus, companies have to maintain those quality standards in all seasons.
Thus, it can be inferred that seasonal fluctuations cause significant problems to FPI and affect the performance and functioning. In some seasons, the procurement is more and related problems are also more e.g. costs of transportation, distribution and storage. Similarly, in some seasons, the procurement of raw material is less and hence profitability suffers. The major reason is perishability or less shelf life of food products.
