Linkages enhance the capability of the food processing industry to generate demand for the products of/in the other industries. They are mainly of two types:

• Backward Linkages: These linkages establish the connectivity of the food processing industry with sources of raw material supply. For example, supply of raw material like tomatoes to a ketchup manufacturer.
• Forward Linkages: These linkages establish the connectivity of the food processing industry with the markets through a distribution network consisting of physical infra like storages, road and rail network etc.

Significance of backward and forward linkages

• Direct link between farmers and food processors encourages and enables farmers to grow products of appropriate quality.
• Removal of intermediaries helps the farmers fetch appropriate and remunerative return for their produce especially the marginal and medium farmers.
• The establishment of cold storage facilities help to reduce the food wastage especially of perishable products with low shelf life like fruits, vegetables, dairy products etc.
• Backward linkages ensure timely accessibility to raw materials and storage facilities for agri produce.
• Similarly, connectivity with markets through distribution networks ensures timely delivery of food products to the consumer markets.
• Maintaining high quality of products and creation of better infrastructure results in cost saving and enhanced efficiency.
• These links among farmers, industry and consumers provide a level playing field for all stakeholders and enhance competitiveness.
• It also helps to improve hygiene and food safety standards leading to greater acceptability of processed food domestically and in the international market.

Challenges in establishing robust linkages

• Due to fragmented land holdings, the marketable surplus is small and dispersed which makes it difficult for industry to timely procure quality raw materials.
• High seasonality of raw material production limits the effective utilisation of linkages.
• Large number of intermediaries and poor infrastructure facilities like cold storage, transport facilities, electricity etc. hinders backward and forward integration.
• Highly fragmented and unorganised nature of food processing industry limits the capability to ensure an efficient supply chain across the industry.
• Inadequacy of information with farmers and small processors and substandard levels of processing leads to compromise with the quality of products.
• Multiplicity of legislation governing the food processing sector leads to contradictions in specifications, conflicting approach, lack of co-ordination and administrative delays.
• Anomalies in domestic food laws with international food safety standards and under developed food testing network.

To address these challenges, the government has launched the ‘Scheme for Creation of Backward and Forward Linkages’ for effective and seamless backward and forward integration by plugging the gaps in the supply chain. Under the scheme, financial assistance is provided for setting up of primary processing centers/ collection centers at farm gate and modern retail outlets at the front end. Furthermore, the government organised Mega International Food Submit and World Food India Hackathon to design solutions by leveraging technology for various problems in the food processing sector.