The Telegraph
Friday , February 14 , 2014
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Plea to decontrol storage rent

- Tight margins because of low rental fixed by govt: Owners

Calcutta, Feb. 13: The Mamata Banerjee government’s decision to continue with the Left Front’s policy of fixing cold storage rentals has come in the way of their modernisation, leaving consumers susceptible to sudden rise in the potato price, several owners said today.

During the annual general meeting of the West Bengal Cold Storage Association — an umbrella organisation of cold storage owners — most participants urged the government to decontrol rents for the efficient running of the facilities.

A cold storage owner explained the vicious cycle that the sector has been experiencing because of the government’s policy of rent control.

“We earn very little margin because of the low rent fixed by the government. Because of the low rent, we can’t generate enough surplus to invest in new technology for better storage. As the facilities are poor, the quantum of produce that can be stored is not enough, which results in price rise because of shortage in the market,” a cold storage owner from Burdwan said at the meeting.

The impact of poor storage facilities in Bengal is felt the most in October-December every year as the supply of potato in the market reduces and the price shoots up.

“This year, the price of potato reached Rs 25 a kg, forcing the government to intervene. But the most important step — decontrolling the rent — was overlooked,” a senior government official said.

He said although Bengal produced more than 100 lakh tonnes of potato every year, the storage capacity was only around 56 lakh tonnes. The state’s annual consumption requirement is 60 lakh tonnes.

“As a higher quantity of potato cannot be stored, the traders can easily control the supply chain,” the official said.

The problem faced by the cold storage owners is similar to bus and minibus operators, who, too, have to bear the brunt of the government deciding fares taking into account political considerations, not economic viability.

“The transport sector is struggling just like the cold storages. The government will never hike rents according to the requirements of the trade as it has elections on its mind,” a cold storage owner alleged.

The decision to continue with the rent-control policy has also come in the way of storage owners securing capital subsidy from the National Horticulture Board (NHB) to upgrade technology.

According to the West Bengal Cold Storage Association, 60 per cent of the 458 cold storages in Bengal are at least 20 years old and need urgent technological upgrade to enhance their capacity.

“But this will require a huge investment. As the government fixes rents of cold storages, we don’t get subsidy from the NHB,” Rampada Paul, the president of the association, said during the annual general meeting today.

The cold storage owners can secure 40 per cent incentives on capital cost from the NHB for upgrading the facilities if the government decontrols the rent.

“We had requested the government repeatedly to take steps to decontrol the rent but nothing has been done over the years,” said another member of the association.

According to Paul, the president of the association, the rent for storing one quintal of potato is Rs 120 a year.

“But it should be at least Rs 140 a quintal as the cost of electricity and labour has increased rapidly in the past one year,” Paul said.

Arup Roy, the agriculture marketing minister, told the cold storage owners during the meeting that they should submit an application stating their demands. “I can understand that non-availability of NHB subsidy is a problem. If anything is a barrier, we will reconsider it,” Roy said.