Maharashtra takes PPP route for farm growth

The idea is to create a value-chain in agriculture by involving corporates that will work with farmers’ groups or associations from production to marketing stage.

Twenty-two companies,12 of them private sugar mills,have been selected and have agreed to partner with such group in everything — from inputs and processing to marketing. They will be working in seven categories of produces — sugar,cotton,oilseed,pulses,fruits,vegetables and poultry. The companies the farmers will draw benefit of subsidies and financial support for 38 state and Central government schemes for these categories of produces. The government is targeting 10 lakh farmers to be made partners in the initiative over the next five years.

A government backgrounder on the new initiative says: “Rising incomes have changed the contents of the household food basket in both urban and rural India. Concern for food safety,traceability and assured year-round availability of quality agri-produce at reasonable prices are the needs of the hour. Organised retail (as yet only 3% of the total retail market) is likely to play an increasingly important role in influencing the nature of agricultural markets in the coming decade. Traditional production and supply arrangements are unlikely to prove adequate in meeting the challenges posed by these two major developments.”

Says S K Goyal,Principal Secretary,(Agriculture): “Eighty three per cent of landholdings in India are now marginal or small. Unless there is an urgent intervention in aggregating producers through farmers’ institutions,it is unlikely to achieve scale in production and leverage it to the advantage of all stakeholders. The fragmented agricultural marketing value chain and the large number of intermediaries are other major constraints,leading to wastage,low returns to producers and volatility in availability and prices at the consumer end. The example of Amul in milk demonstrates the benefits of value-chain integration in agricultural produce.”

He adds: “While production and price risks are the most obvious areas of attention,partnerships between farmers’ groups and market players can lead to better links with input suppliers,financial institutions and research bodies. This convergence can lead to better targeting of government agricultural subsidies and better outcome for public policy. Overall,a collaborative effort between the government,farmers and corporates in agriculture is likely to raise the rate of agricultural GDP growth,thereby directly impacting rural poverty.”

“WEF’s role is to bring the investors on one platform. The forum has been providing financial support for all meetings and conferences and is acting as a facilitator between us and the companies,” says Goyal.

The scheme entails the government and the corporate sector joining hands to organise growers’ associations through appropriate partnership with NGOs or otherwise identify/select aggregators (links to take produce to markets) and enable tie-up with farmers’ associations/groups. They will also coordinate with the Indian Council of Agriculture Research/agriculture universities/private sector to provide improved varieties of seed/seedlings and to introduce innovative technologies as required. The government will address issues in the credit supply chain with support from NABARD/banks.

Together,they will put in place measures for production and productivity enhancement,logistics from farm to market,including post-harvest management,storage and transport infrastructure,aggregators for suitable tie micro-irrigation etc and support to farmers’ groups to develop warehouses,cold chains,controlled atmosphere.

PPP-IAD: MAIN FEATURES

Corporates to propose integrated agricultural development projects across agriculture and allied sectors,targeting at least 10,000 farmers

Complete flexibility in design,with proviso that intervention must cover all aspects from production to marketing. Projects can span 3-5 yrs

Average investment per farmer during project must be quantified. Average of $2,000 per farmer is desirable benchmark. Government support will be restricted to 50% of the overall per-farmer investment proposed,with a ceiling of $1,000 per farmer through the project cycle

Subsidy to farmer for availing drip/ sprinkler irrigation /mechanisation /grading/shade nets etc could be considered separately

Companies will get 40% viability gap support from the state

Must key interventions: a) mobilising farmers into producer groups and registering them in an appropriate legal form or creating informal groups as may be appropriate to the area and project,b) technology infusion,c) value addition,d) marketing solutions,e) project management

Projects will be processed Centrally through an appraisal mechanism created by the state under RKVY. The principal secretary (agriculture) will be a member of the sanctioning team. A state-level sanctioning committee will formulate detailed guidelines for operation and review of the scheme

An independent monitoring agency (a private sector consultancy firm with no conflict of interest) will closely track the performance of the project and report to stakeholders