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Sunday, October 25, 2020

New farm laws: FPCs now able to ink business deals with private players

This would be the first time this FPC, which is located in Walandi village in Deoni taluka of Latur district, has managed to directly procure oilseeds from its members and supply to the private company without any help from Deno APMC.

Written by Parthasarathi Biswas | Pune | Updated: October 13, 2020 9:34:45 am
Farm laws, Maharashtra Farmer Producer Company, private players, Maharashtra APMC, Agricultural Produce Marketing Committee, Maharashtra news, Indian express newsSince the three farm laws were passed, FPCs in Maharashtra have seen newer markets opening up that were inaccessible till now.

In the last two months, Deoni Agro Farmer Producer Company (FPC) has delivered 350 tonnes of soybean to the Latur-based oil extraction plant of ADM Agro Industries India Private Ltd. This would be the first time this FPC, which is located in Walandi village in Deoni taluka of Latur district, has managed to directly procure oilseeds from its members and supply to the private company without any help from Deno Agricultural Produce Marketing Committee (APMC).

Bibhishan Bhosale, director of the company, attributes this to the farm laws implemented earlier this month. “We are in business since 2017 but were concentrating mostly on production of seed and selling agri inputs. Our company is situated in the oilseed capital of India but given the regulation in agricultural marketing, we were not able to buy or sell oilseeds directly from farmers to the processors. But now, since outside mandi trade is free, we are able to ink contracts with private players and directly pass on benefits to our members,” he said.

The company, which has an annual turnover of Rs 25 crore, tried entering such agreements in the past but had attracted notices from the APMC that had the power to levy cess on such trade.

“Mandis levy 1.05 per cent as market cess, but why should players like us, who do not use any of the infrastructure, pay that? We had suspended our private procurement as the cess and the related paperwork was too much to handle,” he said.

The Farmers Produce Trade and Commerce (Promotion and Facilitation) Act, 2020, which has allowed cess-free trade in agricultural commodities outside APMCs, and for players like Bhosale this has come as a blessing. “We do not need to pay cess to the market or worry about notices from market committees,” he pointed out.

Since the three farm laws were passed, FPCs in Maharashtra have seen newer markets opening up that were inaccessible till now. Technically, FPCs or any other trader are free to buy directly from farmers, but the APMC had the power to levy cess (ranging from 1.05 to 1.5 per cent) on the transaction.

In Maharashtra, many major processors have a direct marketing licence (DML) but were still required to pay market cess. In the past, FPCs have directly procured from members or farmers in their area, but these were limited only to government-run procurement under the Price Support Scheme (PSS) when commodities trade below their government-declared minimum support price (MSP). After mandis were limited to exercising their power within their perimeter, many FPCs have started buying directly from members and supplying to end processors.

Yogesh Thorat, managing director of MahaFPC, which is the consortium of FPCs in Maharashtra, said increasing number of FPCs, like the Latur-based Deoni FPC, are signing contracts with private players to produce oilseeds like maize.

In the last two months, Thorat said 12 FPCs in Latur and Osmanabad supplied over 1,200 tonnes of soybean to ADM Agro Industries Private Ltd. “Talks are now on with ITC, COFCO International and many local solvent extraction plants for similar contracts,” he said, adding that since the lockdown, FPCs had supplied 3,000 tonnes of oilseed to corporate companies.

Thorat also said FPCs supplied players inputs at ex-factory prices declared by processors after deducting handling and transportation cost from farmers and in return earn a 1 per cent service charge.

“For the farmer, it is a win-win situation as they are able to offload at their farm gate and thereby save transport cost. Also, the FPC manages to establish newer markets that will help them diversify their business,” Thorat added.

This new market has also seen players like Bhosale talk about reorienting business strategy. Shivaji Petha, director of Anantpal FPC, now says this business will allow them to diversify. Located in Shirur Anantpal taluka of Latur, this FPC till now was mainly focused on the business of agri inputs in their area. Since the new farm laws, however, they have alone supplied 600 tonnes of soybean to ADM Agro Industries India Private Ltd.

Thorat said this season they aimed to supply 1 lakh tonnes of soybean to various processors in the state through FPCs alone.

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