Faced with unfavourable government policies making grain procurement unprofitable, private sector companies have sought drastic changes in procurement guidelines for participating in the growth of the agricultural sector under the Food Security Bill.
FCI procures grain from major producing areas but private agencies feel they have a role to play in areas where FCI is not procuring.
Agriculture minister Sharad Pawar had recently estimated the deficit in procurement to be 5-7 mt and emphasised on engaging private companies for procuring in remote areas.
But, private companies, led by the National Bulk Handling Corporation (NBHC) and National Collateral Management Services (NCMSL), are not inclined to participate in procurement unless the government modifies policies suiting them. These two companies had procured for FCI in 2006-07.
“We have asked the government to frame a long policy and give us a mandate for at least five-seven years. Since, we employ a number of people in remote areas and infuse capital for efficient procurement, anything less than this period would be non-remunerative for us,” said Anil Choudhary, managing director, NBHC.
Private sector companies claim to save at least 10-15 per cent in grain procurement as compared to FCI and other state agencies. NBHC has also sought permission for milling and storing paddy directly procured from farmers, which can be released according to orders issued by the government from time to time. The practice currently prevails in sugar and can easily be replicated in rice, said Choudhary. In 2006-07, FCI had engaged the two companies for a short term, which not only created problems for them in terms of reducing temporary manpower that they had engaged, but also the investment made on infrastructure and working capital was wasted.
Echoing a similar view, Sanjay Kaul, managing director of NCMSL said, “Through engaging private agencies like us, the government can easily save Rs 4,000-5,000 crore per annum.”