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Environmental & Social Due Diligence in Food Processing Industry

Corpbiz is an AI-driven technology platform that provides legal and financial services through its team of experts. Corpbiz seeks to create and provide unique and state-of-the-art environmental solutions for projects affecting the environment in various industries. In order to assist supporters on the one hand and accomplish environmental protection on the other, these solutions will be offered through impact assessment studies. As a trustworthy service provider, we put a lot of effort into giving our customers better services each and every day.

We excel in offering consulting services because of the experienced professionals who work with us. We have been approached by a number of clients because we share their focus on long-term social and environmental issues that both support and enhance their business. Allow us to do the same for you.

Need of Environmental & Social Due Diligence in Food Processing Industry

The food processing industry often requires significant natural resources, including water and energy. Due diligence ensures that these resources are used efficiently, promoting sustainable practices and minimizing environmental impact. Food processing involves complex supply chains, from sourcing raw materials to distribution. Social due diligence helps address issues like fair labor practices, workers' rights, and community well-being throughout the supply chain. Food processing can generate substantial waste.

Environmental due diligence focuses on waste reduction, recycling, and proper disposal methods to minimize the industry's ecological footprint. Social due diligence plays a crucial role in ensuring product safety and quality. It involves assessing the industry's commitment to producing safe and nutritious food, adhering to regulations, and engaging in transparent labeling practices. Food processing industries often have a significant impact on local communities and hence there is an imminent need to invest in ESDD compliance to achieve the overall sustainability goals.

Challenges in Environmental & Social Due Diligence in Food Processing Industry

Environmental and social due diligence is commonly performed by financiers in order to identify potential environmental and social (E&S) risks and liabilities associated with a specific transaction or investment. This is accomplished by assessing the Target Project's/Company's compliance status with respect to applicable national legal requirements as well as international good practice standards and guidelines pertaining to E&S performance.

Some of the major challenges in Environmental & Social Due Diligence in Food Processing Industry that an individual or company has to face are:-

Infrastructure Bottlenecks

While conducting Environmental & Social Due Diligence in Food Processing Industry, inadequate infrastructure for storage, sorting, grading post-harvest management, road connectivity, seaports, airports, information and marketing linkage, electricity, and cold chain are the biggest constraints for the Indian food processing Industry.

Access to Credit

Environmental & Social Due Diligence in Food Processing Industry is highly capital-intensive. The lack of credit access to farmers limits the working capital available, restricting investments in technology and high-yielding inputs. Promoting equity investment in Small and Medium Enterprises (SMEs) that operate along the food value chain and providing interest subsidy to agro-industrial units.

Lack of Research & Development

The Indian food processing industry is dominated by small and medium-scale units. They can't invest in R&D. So, it becomes the government's responsibility to conduct R&D. Indian R&D institutions have not been able to develop innovative products, processes, and machinery as per global standards. The key reasons for this are the separation of academics from applied research, inadequate industry linkages, low commercial orientation, and lack of collaborative efforts with global counterparts.

Raw Material Constraints

Under Environmental & Social Due Diligence in Food Processing Industry, the raw material used by the food processing industry is seasonal, perishable, and variable. Therefore, the availability of the right quality of raw material at the right time and in the required quantity is a major constraint for this sector. Strategy: Precision farming will improve yield and savings through optimal use of water, fertilizers, and micronutrients.

Supply Chain Hindrances

The supply chain in the is quite long and fragmented, which leads to high wastage and high cost. Moreover, Seasonal, variable, and perishable nature of agricultural produce leads to uncertainty in projection. Contract farming helps certainty of supply, reduces the cost of raw materials, and provides high remuneration to farmers. Terminal markets also help to procure the right price.

Benefits of Environmental & Social Due Diligence in Food Processing Industry

The food processing Industry in India has seen remarkable changes and growth over the past few years, driven by changing trends in the market, consumer behavior, and Government initiatives. India's food processing industry is dominated by highly fragmented, unorganized sectors having small-scale operations. Some of the benefits of Environmental & Social Due Diligence in Food Processing Industry are-

Manage Your Supply Chain.

The Enironmental & Social Due Diligence in Food Processing Industry requires taking measures such as ensuring that the quality of your product should match that of the ingredients. This is largely the responsibility of your suppliers. You can manage quality, quantity, price negotiations, on-time payments, and other aspects of your supplier relationships.

A Centralized Approach

While the food industry has many aspects to consider during the process, it is critical that they have a unified approach that provides them with a centralized overview. Environmental & Social Due Diligence in Food Processing Industry will help in recipe quality control, management, sourcing, pricing, labeling any other activities.

Research and Product Development

It is necessary to not only meet but also exceed consumer expectations in Environmental & Social Due Diligence in Food Processing Industry. You can maintain a competitive edge, offer products at competitive rates, and meet all necessary requirements. Furthermore, in order for you to comply with regulations, the research and development component is also essential.

Price Management

Only by being careful with pricing and costing can your company turn a profit. You must be able to obtain the best possible rates from your suppliers, and you must devise rebates, discounts, and commissions based on a variety of factors for your sellers. All of these issues can be addressed by your food manufacturing and distribution solution.

Monitoring and Controlling

When it comes to food, it's not just about having the right ingredients, following the exact recipe, and monitoring the production process; it's also about having control at every level. Only by monitoring and controlling every step of the process can you ensure quality.

Our Services For Environmental Due Diligence Process

The ultimate goal of an Environmental Due Diligence Process is to understand the responsibilities associated with a site and to oversee any associated costs and cleanup efforts.

Transparency and Disclosure of Information

Corpbiz is committed to collaborating with the client to ensure that social and environmental assessment Documents are made available in an accurate, accessible location and in a form and language that affected people and other stakeholders, including the general public, can understand, in order for them to provide meaningful inputs into project design and implementation.

Reporting and Monitoring

Corpbiz performs its own monitoring due diligence, including progress/monitoring report review, field visit, and post-evaluation, and provides assistance in strengthening the client's systems. Corpbiz, in collaboration with the client, continuously monitors projects until completion and, if necessary, beyond project completion.

Mechanisms for Resolving Complaints

Corpbiz promises to establish and maintain a fair and effective grievance redress mechanism to receive and resolve affected people's concerns and issues about the client's environmental and social performance at the project level.

Reasons to Choose Corpbiz

  • Solid Network of 40,000+ Lawyers/Attorneys/Environmental Experts
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  • Maintained Consistency with 7% Client Recommendations
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Overview of Environmental & Social Due Diligence in Food Processing Industry

Environmental & Social Due Diligence in Food Processing Industry are sometimes two sides of the same coin. Whether social or commercial, any lender to agricultural businesses that source from smallholder suppliers would be negligent not to evaluate the strength of those businesses' relationships with suppliers. What we refer to as social impact, which takes the form of timely and ideally higher payments to producers, is simply good supplier relations with the agricultural businesses to which we lend. What we call environmental impact, in the form of training in sustainable agricultural practices, often translates to long-term productivity and supply security.

India is the World's second-largest producer of food next to China and has the potential to be the biggest in the World. India has a strong agricultural foundation, but there is a lot of food waste and very little food processing. In recent decades, there have been substantial changes in the patterns of production, consumption, and trade in Indian agriculture. One change is the shift in production and consumption from food grains to high-value agricultural commodities like fruits and vegetables, milk and milk products, meat, eggs, fish, and processed food products. Trade in high-value products is increasingly displacing exports of traditional commodities such as rice, sugar, tea, coffee, tobacco, etc.

In India, a sizable portion of the economy is devoted to the processing of food, which includes farming, horticulture, plantations, animal husbandry, and fishing. It also covers other sectors of the economy that produce edible goods using agricultural inputs. The Indian government's Ministry of Food Processing splits the industry into six categories: Fisheries, Dairy, fruits & vegetables processing, Grain processing, Meat & poultry processing, and Consumer foods, which includes packaged foods, drinks, and drinking water.

Structure and Composition of the Indian Food Processing Industry

The companies that turn agricultural and livestock products into goods for intermediate or final consumption are part of the food processing or manufacturing sector. Foods that have undergone processing to turn them from raw materials into finished goods are known as processed foods. This can apply to simple products like fruit cans or more sophisticated ones like snack foods. A nation's entire economic structure is greatly influenced by the health of its food processing industry. The sector has been recognized as having immediate potential for economic growth and offers crucial connections and synergies between industry and agriculture. In addition to creating jobs in rural areas, processing fruits and vegetables also yields foreign exchange earnings.

Segments of Food Processing Industry and Products Produced in India

Sector

Products

Dairy

Whole milk powder, skimmed milk powder, condensed milk, ice cream, butter and ghee, cheese

Fruits & Vegetables

Beverages, juices, concentrates, pulps, slices, frozen & dehydrated products, potato wafers/chips, etc.

Grains & Cereals

Flour, bakeries, starch glucose, cornflakes, malted foods, vermicelli, beer and malt extracts, grain-based alcohol

Fisheries

Frozen, canned products, mainly in fresh form

Meat & Poultry

Frozen and packed mainly in fresh egg powder

Consumer Foods

Snack food, nankeens, biscuits, ready-to-eat food, alcoholic and non-alcoholic beverages

Source- Source: Ministry of Food Processing India, Annual report, 2004

Extent of Processing in India

  • Primary Processing: cleaning, grading, powdering, and refining of agricultural produce, e.g., grinding wheat into flour
  • Secondary Processing: basic value addition, e.g., tomato-puree, ground coffee, processing of meat products
  • Tertiary Processing: high-value addition products like jams, sauces, biscuits, and other bakery products ready for consumption

Factors Affecting Processing in India

Regulation

Factors affecting

Skill

Exposure to low-scale operations

Limitations in Retail Management purchase skill and management of large operations.

Technology

Outdated technology due to small-scale operations Low-capacity units

Favorable to small-scale investments Scope for large processors limited

Capital

High-cost finance

Structure

Predominant small-scale sector Low efficiency

Categories of Plastic under EPR Fulfilment in Plastic Waste Management

Different types of plastics possess different characteristics. According to Plastic Waste Management Rules, 2016, there are seven categories of plastics on the basis of their recyclability:

SL NO.

Category

1

Polyethylene Terephalate (PET)

2

High-Density Polyethylene (HDPE)

3

Poly Vinyl Chloride (PVC)

4

Low-density polyethylene (LDPE)

5

Polypropylene (PP)

6

Polystyrene resins (PS)

7

Multi-materials like Acrylonitrile butadiene styrene, poly-phenylene oxide, polycarbonate, Polybutylene terephthalate

Factors Affecting in Environmental & Social Due Diligence in Food Processing Industry

The absence of particularly rural road connectivity, adequate infrastructure, the inadequacy of information and marketing linkages, the lack of supply of electricity, and the absence of cold chain systems are major constraints for the growth of the food processing industry in India.

First factor is, there is poor infrastructure for storing raw food materials. The two main types of storage the warehouses and the cold storage, lag in storage standards. The pests infest the grains at times due to a lack of monitoring, proper use of pesticides, and proper ventilation. Similarly, power outrages cause the cold storage to perform sub optimally, and the quality of food material in the cold storage becomes questionable. The second critical factor is the lack of quality standards and control methods for implementing quality standards in the processing and packaging of processed foods.

Opportunities in the Food Processing Industry in India

  • Large crops and material bases in the country due to agroecological variability offer vast potential for food-processing activities.
  • Integration of developments in contemporary technologies, like material science, electronics, computers, biotechnology, etc., offers vast scope for rapid improvement and progress.
  • Opening global markets may lead to the export of our developed technologies and facilitate the generation of additional income and employment opportunities.

Significance of Environmental & Social Due Diligence in Food Processing Industry

Though there are many promising dynamics that support good growth in this industry, there are still some significant constraints that, if not addressed sooner, can impede the Food Processing Industry in India's growth prospects. One of the most significant constraints is that this industry requires a lot of capital. It establishes a high entry barrier and allowing only a few players to enter the market. Players mean competition, which reduces efforts to improve quality standards. Major challenges faced by the Indian food processing industry include educating consumers that processed foods can be more nutritious, dealing with low price elasticity for processed food products, the need for a distribution network, developing marketing channels, streamlining food laws, improving food quality standards and strengthening food testing network; strengthening institutional framework to develop manpower for improving R&D capabilities to address global challenges. These challenges must be addressed to achieve the full potential of the Indian food processing industry.

Government Data Related to Environmental & Social Due Diligence in Food Processing Industry

As per the Ministry of Food Processing Industry:-

Goods and Services Tax (GST)

  • 60% of food products are in 0% & 5% slab.
  • Zero GST on milk products or milk (like Buttermilk, Curd, and un-branded Paneer), Fish, Meat, nuts, fruits and vegetables. Condensed milk, on the other hand, is taxed at 12% GST, while UHT milk is taxed at 5% GST.
  • Services of pre-conditioning, pre-cooling, ripening, waxing, retail packing, and labelling of fruits and vegetables that do not change or alter the important characteristics of fruits & vegetables attract NIL GST.
  • Refrigeration machinery and parts used in the installation of cold storage, cold room, or refrigerated vehicle for the preservation, storage, transport, or processing of agricultural, apiary, horticultural, dairy, poultry, aquatic, and marine produce and meat are subject to an 18% GST.
  • Machinery used in the dairy sector attracts 12% GST.
  • Machinery for the preparation of meat, nuts, crushers, poultry, fruits, or vegetables and on presses, and similar machinery used for manufacturing wine, cider, fruit juices or similar beverages attract 18% GST.
  • Aerated water, including mineral waters, containing added sugar or other sweetening matter or flavoured Molasses, and pan Masala attract 28% GST.

Income Tax Incentives

  • Food processing units are exempt from paying taxes on profit for the first five years at 100%, then for the next five years at 25% (or 30% for businesses).
  • A 100% deduction is allowed for capital costs related to cold chain or warehouse operations.

Credit Facilities

  • Loans to cold chain companies and food and agro-based processing facilities are categorized as agricultural activities for Priority Sector Lending (PSL).
  • Capital investment in the development of modern storage capacity is now eligible for the Finance Ministry's Viability Gap Funding scheme. Cold chain and post-harvest storage have been identified as a sub-sector of infrastructure.
  • A USD 263 million (Rs. 2,000 crore) special food processing fund in NABARD to provide affordable credit to Mega Food Parks and units to be established under MFPs and designated food parks.

Why Choose Corpbiz for ESDD in Food Processing Industry ?

With a primary focus on supporting small and medium-sized businesses (SMEs), Corpbiz provides a range of services, including business registration, government registration, regulatory measures, tax filing, intellectual property rights, and much more. In India, Corpbiz is a technology-driven platform that offers expert services. We put a lot of effort into providing the best service we can to our clients in Environmental & Social Due Diligence in Food Processing Industry:

  • We respond to all calls and emails in a matter of minutes.
  • We have great automation and customer empowerment in place, so contacting us only requires a click.
  • With our array of corporate services, you can stop worrying about Environmental & Social Due Diligence in Food Processing Industry.
  • After a comprehensive investigation and inspection, our experienced staff will inform you about the project and suggest a premium approach.
  • Because of our extensive network in numerous different countries, we can easily provide certification and approval for use around the world.
  • By using the Environmental Impact Assessment (EIA) to evaluate the project's environmental effects, we suggest creative ways to mitigate or eliminate those effects and obtaining the necessary environmental permits from the appropriate authorities.
  • Corpiz helps you analyse and monitor different environmental media before and after obtaining approval and carrying out Environmental & Social Due Diligence in Food Processing Industry.
  • To recognize and raise service quality standards above and beyond those of our cherished clients.
  • Examining and assessing the results of Environmental & Social Due Diligence in Food Processing Industry.
  • Creating a Sampling and Analysis Plan (SAP) for confirmation.
  • Carrying out sample gathering and analysis for Environmental & Social Due Diligence in Food Processing Industry.

Frequently Asked Questions

Environmental due diligence in the food processing industry involves assessing and mitigating environmental risks associated with the industry's operations, such as waste disposal, pollution, and resource consumption.

Social due diligence ensures that the industry respects human rights, labour standards, and community interests, fostering ethical practices, fair employment, and community development.

The industry must comply with various laws, such as the Environmental Impact Assessment (EIA) notification, and labour laws, like the Factories Act, ensuring adherence to environmental and social standards.

Companies can hire environmental consultants to assess their operations, identify potential impacts, and develop strategies to mitigate these impacts, ensuring sustainable practices.

Social due diligence involves fair labour practices, community engagement, and supporting local development initiatives, promoting positive social impacts that can be followed by the food processing companies.

Challenges include water and energy consumption, waste management, and emissions control. Addressing these issues requires efficient resource management and eco-friendly technologies.

Under environmental & social due diligence, in food processing industry can adopt eco-friendly production methods, invest in renewable energy, reduce water usage, and promote recycling and waste reduction, thus minimizing its environmental footprint.

Certifications like ISO 14001 and SA 8000 demonstrate a company's commitment to environmental and social responsibility, enhancing credibility and trust among stakeholders.

Under environmental & social due diligence, in food processing industry, consumers can support eco-friendly and socially responsible brands, raise awareness about sustainable practices, and make environmentally conscious choices, influencing industry behaviour.

Non-compliance can result in legal actions, fines, and reputational damage. Adhering to regulations is crucial for avoiding these penalties and ensuring ethical business practices.

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