Calcutta, Sept. 9: The Mamata Banerjee government today announced a scheme to allow big private investors to directly procure farm produce — a segment that Buddhadeb Bhattacharjee could not liberate from the stranglehold of the Forward Bloc.
The scheme titled Brihat Krishak Bazar Yojana, which loosely translates into mega farmer market programme, seeks to “connect the local market to high-growth demand centres” and weed out middlemen.
The project will allow private developers to step into a wide array of farm produce business that used to need political patronage to succeed. (See chart)
The plan approved by the state cabinet today carries echoes of what former chief minister Bhattacharjee had wanted to do but could not pull off because of opposition from allies like the Bloc.
Bhattacharjee’s objective was foiled in 2007 as the Bloc launched an agitation against the decision and eventually, Reliance Fresh, which was supposed to invest Rs 4,500 crore, had to shelve its plans.
After the cabinet meeting, chief minister Mamata Banerjee told reporters: “We will set up Brihat Krishak Bazar in every district and a sum of Rs 150 crore will be invested to set up the centres.”
Although the chief minister did not elaborate, documents and official accounts suggest that the government is planning to invite big firms like SSMP, Adani Agri Fresh and Reliance Fresh to invest in agri-marketing.
Some of the eligibility criteria — such as net worth of not less than Rs 150 crore and a three-year experience in the field — suggest the government is eyeing established players.
According to the plan, the state government will give the private developers licences to procure, store and process agriculture produce under the Agriculture Produce Marketing Committee (APMC) Act. It is not clear if any changes will have to be made in the dreaded act, considered regressive in its present form, to facilitate the new scheme.
grand bazar beckons big players
What can private developers do under
the Brihat Krishak Bazar scheme?
They can set up terminal markets to buy fruits and
vegetables directly from farmers, potato cold
storages, grain procurement terminals, rice and paddy godowns and warehouses, grain silos, integrated rice mills, farm produce processing plants,
and sorting units
Who can be
● A body corporate
registered under the Companies Act
lNet worth of more than Rs 150 crore
● Proven record of over three years in creating and
associated with processing
and storing farm produce
● Ability to prove strength to finance
How will the developer be chosen?
Through a competitive bidding process. The process of
selection, after inviting expressions of interest, will be
conducted by the director, agricultural marketing
What help will the government give?
● The government may assist the developer in identifying suitable land
● It may relax land-ceiling provisions
● The land should be arranged or purchased
by the developer
● The government will grant a licence
to procure, store and process agricultural produce
● The government will grant
a licence to run a private secondary terminal (wholesale) market for farm produce
● The government will transfer assets of 15-20 Krishak Bazars against an operation and management contract
● The government may
provide help on water, power, roads and other external
● The government may allow a
viability gap funding of up to Rs 5 crore. Viability gap funding is an indirect subsidy that takes care of losses in the initial years of a project
● The government will enter into a long-term
agreement that allows the developer to procure, mill
and store paddy
● Developer eligible for all other existing incentives
The developers will invest in infrastructure in farming districts such as Burdwan, Howrah, Hooghly, East Midnapore and Birbhum and in parts of north Bengal.
The infrastructure will include procurement terminals for grain to fruits to vegetables, cold storage, warehouses and processing plants.
The documents say the objective of the scheme is to pave way for investments in the post-harvest infrastructure in Bengal. The overall goal is to “pass on maximum share of consumers’ returns to the primary producers” or to increase the earnings of farmers.
When Mamata had objected to foreign direct investment in retail, questions were raised why she was standing in the way of better prices for farmers. Mamata had never convincingly answered such questions but, if the grand bazar scheme takes off, it will be her answer to the pro-FDI camp.
Senior agriculture department officials said the government had realised that until an organised chain was set up to procure the produce, farmers could not be encouraged to reinvest in the fields.
“Majority of the markets are under the thumb of local traders who control the entire supply chain. If you cannot create a new market, farmers will not get proper prices for their produce and middlemen, who inflate the prices, cannot be curbed,” said an official.
The state will allow the developers to run “private secondary terminal markets for agriculture produce”. An official said it meant licences to run wholesale outlets.
The government will transfer assets of 15-20 krishak bazars — the centres being set up by the state in each block where farmers will sell their produce — to the developers against an operations and management contract. Officials said this would allow the investors to get smooth supply of raw materials to run the centres.
Industry appeared enthused. “This is a step in the right direction. It will discover fair price for farmers, improve efficiency by reducing post-harvest losses, tackle supply side constrains and check retail prices, apart from encouraging agri-based industry,” said Mayank Jalan, the managing director of Keventer Fresh.
He said Keventer would bid for such a project.
Senior officials said once the projects get commissioned, it would be considered if the developers wanted to get into the retail market.
Reliance Fresh was given the go-ahead to set up distribution-cum-processing centres. Each centre required 100 acres, which the government was supposed to acquire. But the plan was rolled back because of opposition from within the Left Front.
The company’s business model has changed since then. Reliance has built facilities for its own consumption now.
Naren Chatterjee, the Bloc leader who had opposed entry of Reliance Fresh in 2007, said that he would continue to oppose the move.