In a major farm-to-fork initiative, the ministry of food processing has now invited bids from private parties for setting up 10 mega food-parks involving farmers, with cold storage and grading facilities.
A special purpose vehicle will be formed for the implementation of the scheme, with financial institutions, retailers and farmers’ cooperatives as stakeholders.
The parks, 10 hectare each, will require a total investment of Rs500 crore, with less than 49% government funding.
P.I. Suvrathan, secretary, food processing said: “We are looking for a company with a strong pan-national presence, which will select the areas for five pilot parks to begin with. They will submit a detailed feasibility report and tie up with farmers groups before we sanction the subsidy.”
The integrated food zones will have a three-tier supply chain network. Producer groups, comprising 20-30 village self-help groups, and around 20 farm labs or collection centres for fruits and vegetables form the first two tiers. The food park will be the third tier, serving as a central processing unit, complete with information kiosks and transportation facilities to link it with nearby markets. The farm labs will have cooling, grading, packing and transfer of technology facilities.
A producers company comprising farmers will be formed wherever farmer cooperatives are non-existent.
The ministry has recommended that the food parks be given the same taxation benefits as special economic zones. To avoid land acquisition hassles, farmers will be asked to contribute land themselves.
According to Suvrathan, “we have had pre-bid meetings with six-seven companies and want to begin this as fast as possible. We will take a decision in the first week of April.”
If it takes off, the scheme may mitigate some of the supply chain and backward integration problems most retail companies are facing. Adds Suvrathan, “This scheme will empower the farmer to hold onto his produce for seven days, and provide an interface between the farmers, processors and retailers.”
This isn’t the first time that the government has launched such schemes. The previous one, to set up 52 food parks across the country, was a flop. Many of them were set up in grossly unsuitable locations that lacked basic infrastructure facilities like power, water and roads. All of them had weak linkages with the market. Most of them were sanctioned without a comprehensive project report from the raw material supply chain to the market. This time around the government is taking extra care to avoid past mistakes.
Currently, farmers’ share in the value chain is less than 30%. A study by the National Institute of Agricultural Marketing says the village trader grabs 35% of the margin, with the wholesaler and retailer, netting 15% and 22%, respectively. This scheme aims to do away with the middlemen.
Anil Sardana, an agri-business consultant, who recently compiled a survey on organized retail alongwith the United Nations’ Food and Agriculture Organization, says: “Due to problems in logistics and lack of infrastructure, retailers report a 20% to 60% wastage of fruits and vegetables. Most of them are struggling to build backward linkages to assure both quantity and quality.”