Food processing industry: Thriving yet largely unregulated

­­Growing consumerism, urbanization, and the middle class in the country have been key drivers for the food processing industry. The transformation has been phenomenal especially in recent years with intensifying competition in not only the traditional processed food items (like cereal, biscuits, jam, pickles, juices, spices, etc.) but also the higher value added products, such as frozen ready-to-cook/fully cooked food, and processed meat and poultry - highlights the central bank in its quarterly report.

Countries have been showing keen interest in Pakistans food sector; lately, European companies from the food and agribusiness sector have had their eyes on the Pakistan. Sadly though, these interests do not shine though the FDI numbers in the relevant subsectors.

State Bank of Pakistan has released a special section this time in its quarterly report (1QFY17), which focusses on the key trends and challenges faced by the food processing industry. Besides rising demand, the evolution of the retail landscape in the country - more apparent in the urban centres where the hypermarkets or supercenters are heavily concentrated has lifted the food processing sector. Rising demand and changing consumption patterns have not only changed the way the producers and firms package and market brands and create awareness, smaller players have intensified competition.

Apart from the key players like Nestle, Unilever, Engro Foods, National Foods, Shaan Foods, and Mitchells Farms, there are over 30 firms in the formal food processing industry and countless in the undocumented sector. Like any other sector, the undocumented segment is the key concern for food processing industry. Informal segment is a major threat it discourages innovation and stifles growth, states SBP. Apart from being under-taxed, the unregulated nature also results in subpar quality.

Also, the need for quality standards across the entire supply chain for strong backward and forward linkages is also pointed out crucial for enhancing exports of the country.