States plan incentives for agri marketing

The agriculture ministry is considering liberal incentives to the private entities to encourage them to set up wholly privately owned and operated markets for perishable farm produce, ending the state monopoly over agricultural marketing.

At least 10 states, besides the Union Territory of Chandigarh, have already identified more than 30 sites for setting up private markets, to be called terminal markets, for trading in fruit, vegetables and other perishable farm goods.

Many states have gone a step ahead and invited "expression of interest" from the private companies, financial institutions and cooperatives for this purpose.

"However, the response form the private sector has not been encouraging chiefly due to paucity of incentives offered to them. The main sop at present is the option for equity participation (up to 49 per cent) by the state or Central governments," said a senior official of the agriculture ministry.

The ministry is, therefore, considering what more incentives could be offered to make the scheme more attractive for the private entities, the official added.

Under this novel initiative, aimed at reforming agricultural marketing, the proposed terminal markets with state-of-the-art facilities will be constructed by private enterprises with the support of the selected financial institutions and the state governments. The market operators would be free to levy user charges for their services.

The proposal for setting up the terminal markets under the National Horticulture Mission was approved by the Cabinet Committee on Economic Affairs (CCEA) in November 2006, paving the way for the state government to undertake the spadework for this purpose.

The state governments have to identify land for such markets and create legal and regulatory framework for enabling the private entrepreneurs to operate the markets on a level-playing field with existing markets.

They are also required to amend their Agricultural Produce Marketing Committee (APMC) Act as a pre-requisite for setting up the private terminal markets.

In all, 13 states have initiated action on this front with 11 of them having already identified the sites after ascertaining the availability of land. Many of them had conducted conferences with the potential participants, including the financial institutions, prior to inviting formal expression-of-interest letters.

The agriculture ministry has already circulated the operational guidelines of the scheme to the states which have amended their APMC Act to facilitate direct marketing and setting up of markets in the private sector.

These private markets will have a "Hub-and-Spokes" format. Under this, the terminal market will constitute the hub which will be linked to a number of collection centres, constituting the spokes, located in key production centres to facilitate easy access to markets by the farmers.

The facilities to be provided at the markets will include electronic auction, cold chain and logistics support from the primary collection centres located at convenient places.

The markets will be set up by corporate or other private enterprises or cooperatives by themselves or through the outsourcing route. The concerned private entity could even be a consortium of entrepreneurs from agri-business sectors, cold stores, transporters, warehouses or other agri-infrastructure providers.