The agriculture ministry has recommended granting infrastructure status to the agricultural marketing set up by public and private bodies. A proposal in this regard has been submitted to the finance ministry.
The move is significant as it would enable these entities to get priority sector lending from banks.
According to officials, the finance ministry granted infrastructure status to warehousing and cold storage facilities.
"The idea of having agriculture marketing set up is to bring up more and more markets for distribution of food items apart from the Agricultural Produce Marketing Committee (APMC). However, the gestation period is 8-10 years till an entrepreneur or an entity setting it up breaks up. If such projects do not get funding, the entire agenda of agricultural marketing would be meaningless," said an official source aware of the development. APMCs are marketing boards set up by the state governments.
Banks have been shying away from funding such projects due to long gestation period and uncertainty of cash flows, they said. The ministry, which is currently working on reforms in agricultural marketing, has also proposed that such projects should also be made eligible for viability gap funding (VGF) of the government.
This proposal has also been suggested to the working group on the 12th Plan period, said official sources. The VGF scheme provides financial support in the form of grants, one-time or deferred, to infrastructure projects undertaken through the public private partnership model.
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The prime minister had set up three working groups to revamp the food and distribution, agricultural produce marketing and agricultural productivity.
The committee led by Gujarat chief minister Narendra Modi on consumer affairs and agricultural marketing reforms had made 20 recommendations with 64 detailed actionable points to combat inflation. The report suggested setting up of a price stabilisation fund by the central government to help the states procure and distribute essential commodities in short supply.
Other recommendations included liberalisation of agriculture markets to improve the efficiency of distribution channel from farms to consumers, increasing participation of organised sector/co-operatives in retailing, including farmers’ markets, agro-processing, storage and cold chains for wastage control and reduction, proactive monetary policy, etc.
For evolving a single national agriculture market, the report recommended setting up a ministerial level co-ordination mechanism at the national and the regional level for co-ordinated policy-making. The committee has called for preparation of a 10-year perspective plan to improve agri-infrastructure of backward and forward linkages for agriculture production and marketing.