Kolakta: Opposition by the Forward Bloc, a constituent of the Left Front government in West Bengal, to the entry of organised retail in the agricultural produce business, could hurt the state’s plans to set up three markets for farm produce in partnership with the private sector.
The agricultural marketing department, run by members of the Forward Bloc, has not issued licences to Reliance Industries Ltd to source farm produce. Under India’s Agricultural Produce Marketing Regulatory Act, any company that wants to source (or buy) farm produce needs a licence.
Protests by the Forward Bloc has prompted the state’s department for food processing and horticulture to open dialogue with the state’s agri-marketing department on the proposal to set up three terminal markets for farm products in a public-private partnership. The agri-marketing department, run by members of the Forward Bloc, has turned into a hurdle, just as the food-processing department was gearing to float tenders to select the private partners for the project.
The agri-marketing department has been postponing issuing licences to Reliance under the Agricultural Produce Marketing Regulatory Act. Reliance needs the licences to kick off its agri-retailing business in the state.
The agricultural marketing board chairman and also Forward Bloc member, Naren Chatterji and the party’s secretary Ashok Ghosh, have been maintaining that they will fight any attempt by the government to enter into a joint-venture in the area of agri-marketing.
Agricultural produce is currently sourced in two ways. Companies can either directly source from the actual producers or wholesale mandis (markets). States such as Haryana, Punjab, Andhra Pradesh and some parts of Uttar Pradesh, have allowed direct procurement from farmers.
In West Bengal, while Spencer’s Retail of RPG Enterprises, has kicked off operations and sources farm produce from wholesale mandis, both Reliance Fresh and Metro AG’s cash-and-carry business have sought direct procurement.
The department of food processing had initiated a move to organize the supply chain in agriculture by building terminal markets. In the evolving market scenario, the terminal or auction markets proposed could be a major breakthrough for West Bengal, which loses 30% of its produce in the post-harvest phase.
Operating on a ‘hub and spoke’ model, the terminals would source their produce from surrounding areas within a 150km radius. Fruits and vegetables would be washed, graded, sorted and packed at the collection centres (spokes), before being sent to a hub equipped with cold storage, warehousing and ripening facilities.
Given the high levels of technology and the amount of capital that will have to be pumped in, the project will require private investment, said Rajesh Srivatsava, managing director, corporate and commercial banking of Rabo Bank India, which did the feasibility study for the project.
The feasibility report submitted by Rabo Bank in 2005 suggested that the department of agri-marketing should be one of the equity holders, with the food processing department, the association of commission agents and wholesale traders and a private player working alongside.
“While the tender for the markets will be open to all, it will be good if the private partner coming in also has a retail operation in place to complete the chain,” said Srivatsava.
“We have already initiated a process of consultation with the agricultural marketing board,” said Sanjeev Chopra, secretary, department of food processing and horticulture.
“We will not allow any of the major corporate bodies or multinational companies to take control of the entire agri-product distribution chain,” Chatterji insisted.
Meanwhile, Metro will also have to apply for licences, with the agricultural marketing board extending the exisiting licencing regime to Kolkata and Howrah, which were outside the purview of the agricultural marketing committees until last week. Reliance Fresh has acquired 50-60 properties in and around Kolkata, but is waiting for the licences from the agri-marketing department to begin operations.