Budget 2012: Agriculture sector gets a boost

AHMEDABAD: The 2012-13 budget saw the government infusing investment in agriculture infrastructure including warehousing, terminal markets and testing laboratories. Welcoming the move the industry feels that efficiency in supply management which is still in nascent stage in the country will improve in the long run.

“The announcement to boost investment in agriculture by including viability gap funding scheme in respect of terminal markets, agriculture marketing infrastructure and testing laboratories will encourage private sector investment to cover the huge deficit in the agriculture marketing infrastructure. Modernization of fruits and vegetable supply chain where there is over 25 %storage and handling losses is likely to get a boost,” said National Collateral Management Services (NCMSL), MD, Sanjay Kaul.
The announcement will also step up agriculture grading and testing facilities which are presently non-existent across the country he said.


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Extension of interest subvention scheme and additional interest subsidy of 3% for timely repayment for post-harvest credit against negotiable warehouse has been a positive development according to the industry. “This will help in addressing the issue of distress sales by small and marginal farmers. However, the scheme should be made applicable to private sector banks as well,” said National Bulk Handling Corporations, MD and CEO, Anil K. Choudhary.

He added, “substantial hike in outlay for warehousing under Rural Infrastructure Development Fund (RIDF) to Rs 5000 crore is a timely measure when the country is facing huge deficits in storage space.” With rise in food grains production and the intended Food Security Act, this measure would help in higher credit flow for warehouse construction at affordable rates for intending investors said Mr Choudhary.

“The Government’s endeavor should therefore be to reduce the interest cost further for such a critical requirement. This could be done if the funds from RIDF are directly disbursed by NABARD to intending recipients to avoid inter-mediation cost of commercial Banks,”he said.

Ahmedabad headquartered Adani group which set up the modern food grain silos and handling facilities under exclusive BOO (Build, Own and Operate ) agreement with Food Corporation of India (FCI) across Punjab and Haryana is planning to increase its presence in the grain storage sector.” “The creation of additional food grain storage capacity of 2 million tones in the country, apart from 15 million tonnes capacity to be created under the Private Entrepreneur’s Guarantee Scheme, will ensure greater participation by the industry. Apart from bringing modern technology it will also stop distress selling of grains by farmers,”said Adani Wilmar, COO, Angshu Mallick.

However, warehousing companies felt that the announcement of an interest rate subvention for post harvest storage by small and marginal farmers was impracticable. “It is mainly the medium and large farmers which have agricultural surpluses and hence it will not give tangible relief to the farmer community. The scheme has also been unnecessarily restricted to negotiable warehouse receipts which are yet to take off in the country. The scheme is further limited to only public sector banks, even though private sector bank lending to the agriculture sector is quite high,”said Mr Kaul.