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Six years after the United Progressive Alliance government embarked on one of its most ambitious programmes, to set up 42 giant food parks across the country, the scheme, intended to provide the food processing industry a fillip on the lines of existing textile clusters, lies at the crossroads.
A fresh attempt to revive the scheme was made by the food processing ministry last month. It reallocated 17 parks to the private sector and state governments, including Adani Ports and Special Economic Zone, Jain Agro Trading Company, Ruchi Acroni Industries, Kerala State Industrial Development Corporation and Haryana State Industrial and Infrastructure Development Corporation.
Of the 42 food parks allocated since 2008-09, only four are operational. One of these is technically not considered a food park because all the units in it are run by the same company. The allocations to 17 parks were cancelled and fresh allotments made in March 2015. (FOOD PARK FAILURE)
A senior official from the ministry said it is a misnomer that all the proposals that were cancelled were allocated in a single phase.
“The allocation of was made in phases, as and when the Cabinet Committee of Economic Affairs approved. For example, of the 42 projects, 10 were allocated in the first phase, of which only two got cancelled,” he explained.
However, many seemed not impressed.
“The design of the scheme is faulty. That apart, allocation of the parks has been arbitrary. The role of the central government is limited, leaving it to state governments to make the scheme work,” says an official associated with Indian Council for Research on International Economic Relations, an autonomous research organisation that is evaluating the scheme.
The parks were to have modern food processing facilities like cold storage, chillers, sorting and gradation. They were meant to augment farmers’ income in the region and provide marketing support. Each park was to be over 30-50 acres. The investment expected was in excess of Rs 15,000 crore.
In previous allocations, one park in a northeastern state was to be set up near a hospital, where crucial backward and forward linkages were unavailable. The recent allocations, too, are not without their share of controversy. “How can you have the same authority granting clearances and competing with private players?” the official wonders.
Initial rules did not permit states to have their own food parks but recent changes have invited interest from state governments as well. “Yes, the guidelines were changed from time to time because it was a gradual learning process for all of us and moreover, we wanted the guidelines to be as foolproof as possible,” the official clarified.
The other contentious issue is consultants and agencies. The official explains the same company sometimes acted as project management agency for the government and consultant for private companies. But, the government said, there was no single project where the consultant and the agency was the same firm.
Developers have complained that permission from the central government was perhaps the simplest of all procedures in setting up a food park. The real tussle started at the state level. “In most cases, developers are not able to arrange bank funding and do not have clearances from local bodies,” Amit Dhanuka, president of the All India Food Processors’ Association, told Business Standard.
An official in a West Bengal-based food park, whose allotment was cancelled in the recent round, says the problem is finding 50 acres. “The states are non-cooperative. It becomes really difficult for an individual player to arrange such a large piece of land on its own,” he says.
Developers set up food parks on the assumption that these would attract at least 30-40 players. When that did not happen, the official says, the developer was forced to set up three or four units on its own. This made the parks unviable because chillers, cold storage and other facilities remained grossly under-utilised.
“If someone has a captive forward linkage like a chain of retail stores, the parks are viable. Otherwise, there is little chance of finding buyers,” the official says.
The idea of shared infrastructure in a food park is also not attractive because of the likelihood of the developer exiting. “There are so many layers of clearances that any serious participant feels frustrated,” says an official from one of the existing operational parks.
A fresh attempt to revive the scheme was made by the food processing ministry last month. It reallocated 17 parks to the private sector and state governments, including Adani Ports and Special Economic Zone, Jain Agro Trading Company, Ruchi Acroni Industries, Kerala State Industrial Development Corporation and Haryana State Industrial and Infrastructure Development Corporation.
Of the 42 food parks allocated since 2008-09, only four are operational. One of these is technically not considered a food park because all the units in it are run by the same company. The allocations to 17 parks were cancelled and fresh allotments made in March 2015. (FOOD PARK FAILURE)
A senior official from the ministry said it is a misnomer that all the proposals that were cancelled were allocated in a single phase.
“The allocation of was made in phases, as and when the Cabinet Committee of Economic Affairs approved. For example, of the 42 projects, 10 were allocated in the first phase, of which only two got cancelled,” he explained.
However, many seemed not impressed.
“The design of the scheme is faulty. That apart, allocation of the parks has been arbitrary. The role of the central government is limited, leaving it to state governments to make the scheme work,” says an official associated with Indian Council for Research on International Economic Relations, an autonomous research organisation that is evaluating the scheme.
The parks were to have modern food processing facilities like cold storage, chillers, sorting and gradation. They were meant to augment farmers’ income in the region and provide marketing support. Each park was to be over 30-50 acres. The investment expected was in excess of Rs 15,000 crore.
In previous allocations, one park in a northeastern state was to be set up near a hospital, where crucial backward and forward linkages were unavailable. The recent allocations, too, are not without their share of controversy. “How can you have the same authority granting clearances and competing with private players?” the official wonders.
Initial rules did not permit states to have their own food parks but recent changes have invited interest from state governments as well. “Yes, the guidelines were changed from time to time because it was a gradual learning process for all of us and moreover, we wanted the guidelines to be as foolproof as possible,” the official clarified.
The other contentious issue is consultants and agencies. The official explains the same company sometimes acted as project management agency for the government and consultant for private companies. But, the government said, there was no single project where the consultant and the agency was the same firm.
Developers have complained that permission from the central government was perhaps the simplest of all procedures in setting up a food park. The real tussle started at the state level. “In most cases, developers are not able to arrange bank funding and do not have clearances from local bodies,” Amit Dhanuka, president of the All India Food Processors’ Association, told Business Standard.
An official in a West Bengal-based food park, whose allotment was cancelled in the recent round, says the problem is finding 50 acres. “The states are non-cooperative. It becomes really difficult for an individual player to arrange such a large piece of land on its own,” he says.
Developers set up food parks on the assumption that these would attract at least 30-40 players. When that did not happen, the official says, the developer was forced to set up three or four units on its own. This made the parks unviable because chillers, cold storage and other facilities remained grossly under-utilised.
“If someone has a captive forward linkage like a chain of retail stores, the parks are viable. Otherwise, there is little chance of finding buyers,” the official says.
The idea of shared infrastructure in a food park is also not attractive because of the likelihood of the developer exiting. “There are so many layers of clearances that any serious participant feels frustrated,” says an official from one of the existing operational parks.
