Latest farm reforms may light up Cargill's expansion plans in India

For companies like Cargill, the legal framework brings stability, creating an environment for infrastructure investment

The farm reforms have rung a bell in Cargill and the company is now looking at what more to do in the sector. Specific investment plans are yet to crystallise, but Simon George, president, Cargill India, believes the reforms would act as a catalyst in attracting private sector investment in building supply chains for taking Indian farm produce to national and global markets. 

The reforms that caused a stir allow farmers to sell outside the Agricultural Produce Market Committee (APMC) market yards and are aimed at ensuring better prices. For companies such as Cargill, the legal framework brings stability, creating an environment for infrastructure investment.

Participation in international trade, including exports, has been as and when opportunities arise even though Cargill operates in about 70 countries. George said the taxes charged through the APMC was one of the reasons making agri products uncompetitive in the global market. “The legislation will bring new opportunities for the farmer and the capability of taking a farmer to the global supply chain will open up now,” he said. 

Various taxes, fees, commission are levied on trade through APMCs, which according to the private sector companies is opaque. Moreover, the global supply chain is based on a consistent movement of goods. 

“Earlier, the uncertainty of essential commodities Bill restricted private firms from investing in storage capacities, as the stock limit conditions hindered investments in agriculture infrastructure,” George said. “Allowing private firms to invest in storage capacities would ensure there is price stability in the produce, making the country globally competitive, and would help farmers connect to global supply chains.”

Inadequate storage capabilities in the country led to wastage of perishables each year. “In a season where production is huge, the farmer has to resort to distress sale, and in a lean season, prices go up, because there is insufficient storage capability. Infrastructure will bring stability to the market,” George said.

Cargill operates through regional merchandising and origination offices besides multiple third-party storage locations. It has a storage facility in Davangere, Karnataka, where it invested $13 million to provide more shelf life to produce. Cargill also has 12 manufacturing plants in India, majority of which are in agro-food.

Drawing a parallel between the agri reforms and economic reforms of 1991, he said: “It is something similar to the 1991 reforms when people were scared about what might happen to the country and whether it would be taken over by privatisation and globalisation. But it actually pulled out 250 million people out of poverty. The farm reforms are a significant first step in opening up agriculture.”