Cold storage units want to come out of realty bracket

Being the largest potato-producing region of the country, Agra also has the highest concentration of cold-storage units in the state, with over 300 units functioning at present and more units on the cards.

However, these cold storage units are currently facing an acute problem of loans for expansion, with banks and financial institutions putting the cold storages in the real estate category along with commercial establishments like hotels and nursing homes.

Raising its objections to the classification of a purely agricultural unit as a commercial establishment by the banks and finance companies, the National Chamber of Industries and Commerce (NCIC), UP, has shot off a letter to Finance Minister P Chidambaram, seeking a reclassification of cold storages in agricultural establishments.

NCIC Chairman Anil Kumar Verma said currently the finance companies treated hotels, big builders, nursing homes and cold storages as real estate, and this necessitated that the finance companies seek clearance from their headquarters before any loan could be extended to a cold storage unit.

Besides, he said due to the wrong classification, the cold storage units were paying high interest rates and a loan amount of just about 10 per cent of the paid-up capital, which was insufficient, considering the highly risky nature of this business where a bad season could completely spoil the year.

According to Verma, the Agra Cold Storage Owners Association had approached the chamber to seek its mediation on this issue and accordingly, the chamber had requested the finance minister to reconsider putting cold storages into a more lenient category for loan purposes.

He said keeping in mind the promise made by the Congress-led central government to protect the farmers' interest, it was necessary to subsidise cold storage operations because higher operational costs of the cold storages would in turn result in the high storage charges obtained by the cold storage owners from the farmers.

This could hardly be accepted in the present scenario where farmers had become too weak economically to continue farming at such low profit margins.