Agriculture Uks Chauhan

PPP NODAL OFFICERS’ WORKSHOP STATUS IN THE DEPARTMENT OF AGRICULTURE & COOPERATION MINISTRY OF AGRICULTURE

U.K.S. Chauhan Joint Secretary (Agricultural Marketing) & Agricultural Marketing Adviser 20.09.2007

Contents •

Salient Features - PPP Cell: Origins and Envisaged Role Existing Means of Support to PPP Cell

• Potential Areas for Private/ PPP Ventures in Agriculture •

PPP in Extension Services

•

PPP in Seed Sector

•

Encouragement to PPP through Market Reforms - Provisions of Model APMC Act

•

Programmatic Initiatives based on Reforms – New Schemes, Modern Terminal Markets, Agri-Marts etc.

Salient Features •

Large investment required in service and marketing infrastructure in agriculture and allied sector

•

Ministry of Agriculture has adopted various mechanisms to promote PPPs in key areas

•

Private partners include corporate cooperatives and individuals

•

Ministry’s support includes equity participation, venture capital assistance, subsidy for capital investment, providing access to data base etc.

•

Private involvement includes investment in infrastructure, delivery of services, providing inputs etc.

•

No project taken up by MoA under VGF Scheme of MoF.

sector,

NGOs,

SHGs,

PPP Cell: Origins and Envisaged Role •

PPP Cell in the Department of Agriculture & Cooperation has been set up in the National Institute of Agricultural Marketing (NIAM), Jaipur

•

Mandate of PPP Cell is not clearly defined and needs to be reviewed

•

Various Divisions of the Department consult NIAM in relevant matters while formulating policies and projects

•

PPP activities have been mainly promoted in the Department in – – Agricultural Extension Services – Production of seed – Agricultural Marketing

Existing Means of Support to PPP Cell •

Budgetary support exists under various Schemes of the Department having scope of PPP activities

•

NIAM has not been provided with any staff or funds for managing PPP Cell

•

NIAM has capability to generate its own resources for running the PPP Cell

•

NIAM has a professionally qualified faculty headed by a Joint Secretary level Director General

•

Inter-Ministerial or Inter-Divisional coordination is managed by the Agricultural Marketing Division in DAC.

Potential Areas for Private/ PPP Ventures § Primary Value Addition Centres/ Aggregation Centres for clusters of 4-6 villages § Mandi modernization in PPP mode § Outsourcing mandi operations for professional management § Cold chain for perishables all along the value chain § Manufacturers/ Processors/ Exporters/ Retail suppliers may participate in contract farming/ buy-back arrangements § Food safety & Quality Control Testing, Grading & Certification

Potential Areas for Private/ PPP Ventures § Modern Terminal Markets near urban centre with back-end Collection Centres § Direct Markets / District Marts/ Agri-Marts/ Agri-Clinic & AgriBusiness Centres § Specialized Commodity markets § NHM clusters as green corridors § Bulk storage infrastructure with bulk handling § Perishable Cargo Centres for export

Potential Areas for Private/ PPP Ventures § Dairy sector infrastructure § Livestock, meat, fish market infrastructure § Modern slaughter houses/abattoirs § Food processing infrastructure § Private extension/ Marketing intelligence/ Farm Schools § Rural internet service centers for agri-marketing services/ e- trading

PPP in Extension Services •

Under Extension Reforms Scheme, non-governmental agencies are involved through extension work plans prepared by ATMAs and approved by IDWG at State level

•

10% allocation on recurring activities under the Scheme at District level is used through non-government sector

•

Partnering is generally through ATMAs set up in the Districts (already functioning in 326 Districts) – to be expanded to all Districts in near future)

•

Non-governmental agencies include SHGs/ FOs, NGOs, corporates, agrientrepreneurs, input suppliers etc.

•

PPP activities involve conduct of frontline demonstration, field trials, farm schools, training programmes, exhibitions and fairs, technology dissemination etc.

•

Farm schools are hosted by achiever farmers or others who are provided service charges @ 10% of the total cost.

PPP in Seed Sector •

New Scheme launched during X Plan to provide assistance for seed production in private sector

•

Credit-linked back-ended investment subsidy @ 25% is provided up to Rs.10 lakh per unit on seed infrastructure development

•

Private companies, individuals, SHGs and seed cooperatives are eligible for subsidy

•

Seed infrastructure includes cleaning, grading, processing, treatment, packaging, storage and testing facilities

•

94 Private projects have been approved for a capacity of 1.83 lakh tones of seed by 31st July, 2007

•

Under National Food Security Mission for Wheat, Rice and Pulses, assistance cap is proposed to be increased to Rs. 25 lakhs

•

Private sector is also proposed to be made eligible for seed distribution subsidy at par with public sector agencies.

Encouragement to PPP through Market Reforms Provisions of Model APMC Act § PPP in management & extension activities/ Promotion of etrading § Encouraging professional management in APMCs § Provisions for Contract Farming § Establishment of Private markets/ Farmer-consumer markets/ Direct marketing § Setting up of State Marketing Extension Cells/ State Agricultural Produce Standards Bureaus.

Status of APMC Act Amendments States/ UTs having amended Acts –

Reportedly no Amendment Needed –

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17.

•

Andhra Pradesh Arunachal Pradesh Assam Chhattisgarh Goa Gujarat Himachal Pradesh Karnataka Madhya Pradesh Maharashtra Nagaland Orissa Punjab/ UT of Chandigarh ? Rajasthan Sikkim Tripura & Uttar Pradesh ??

Tamil Nadu ?

Partially Amended – • •

Haryana (Only Contract Farming) & NCT of Delhi (Only Direct Marketing)

Amendment Bills under active finalization – •

Jharkhand, Uttarakhand, West Bengal, NCT of Delhi & Puducherry

Remaining States – •

Haryana, J&K, Meghalaya & Mizoram

States/ UTs with no APMC Act – •

Bihar (repealed w.e.f. 01.09.2007), Kerala, Manipur and UTs of Andaman & Nicobar Islands, Dadra & Nagar Haveli, Daman & Diu & Lakshadweep

PPP in Management Activities Set up and promote public private partnership in management of the Agricultural Markets States which have adopted the suggested provision:

• H.P., Karnataka, Nagaland, Sikkim

States which have not adopted it:

• A.P., Arunachal Pradesh, Assam, Chhattisgarh, Gujarat, M.P., Maharashtra, Orissa, Punjab, Rajasthan, T.N., Tripura, Uttar Pradesh, UT of Chandigarh

PPP in Market Extension Activities To promote Public-Private Partnership in Extension activities of Market Committee States which have adopted the suggested provision:

• A.P., H.P., Karnataka, Nagaland, Sikkim States which have not adopted it:

• Arunachal Pradesh, Assam, Chhattisgarh, Gujarat, M.P., Maharashtra, Orissa, Punjab/ UT of Chandigarh, Rajasthan, T.N., Tripura, Uttar Pradesh

E-trading To promote and encourage e-trading, market committee may establish regulatory system, create infrastructure and undertake other activities and steps needed thereto States which have adopted the suggested provision:

• Gujarat, H.P., Karnataka, Nagaland, Punjab, Sikkim, Uttar Pradesh, UT of Chandigarh States which have not adopted it:

• A.P., Arunachal Pradesh, Assam, Chhattisgarh, M.P., Maharashtra, Orissa, Rajasthan, T.N., Tripura

Private Market / Direct Marketing Establishment of private market yard and direct purchase from farmers States which have adopted the suggested provision:

• A.P., Arunachal Pradesh, Assam, Gujarat, H.P., Karnataka, M.P.(can be done under the bye-laws), Maharashtra, Nagaland, Orissa (excluding for paddy/ rice), Punjab & UT of Chandigarh (not for direct purchase), Rajasthan, Sikkim, Tripura, Uttar Pradesh States which have not adopted it:

• Chhattisgarh, T.N.

Consumer/ Farmer Market Establishment of consumer/ Farmer market States which have adopted the suggested provision:

• Arunachal Pradesh, Assam, Gujarat, H.P., Karnataka, Maharashtra, M.P.(can be done under the bye-laws), Nagaland, Punjab (only enabling provision) Rajasthan, Sikkim, Tripura, Uttar Pradesh, UT of Chandigarh (only enabling provision) States which have not adopted it:

• A.P. (?), Chhattisgarh, Orissa, T.N. (being set up under Executive Orders)

Programmatic Initiatives based on Reforms •

Reform-linked central assistance to encourage public/ private investment for development of marketing infrastructure, common facilities for aggregation & value addition of produce and grading/ packaging/ quality certification facilities

•

Scheme to set up modern terminal markets under NHM for perishable agricultural produce with suitable backward & forward linkages

•

World Bank assisted MACP (5-6 States) and ADB Study for Agri-business Development Project (2 States)

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Development of post-harvest/ cold chain infrastructure, CA storage facilities, refrigerated transportation by road/ rail, perishable cargo centres at air & sea ports under NHM

•

Expansion of scientific storage facilities in rural areas (Rural Godown Scheme)

•

Marketing Information System (AGMARKNET) to facilitate market intelligence services and market led extension to encourage demand-driven quality production

Reform-linked Scheme for Development of Agricultural Marketing Infrastructure Agricultural Marketing Infrastructure Projects §

Infrastructure for Collection, Grading, Packaging, Wholesaling, E-trading, Market Oriented Extension, Production Planning etc., including mobile infrastructure (excluding transportation facilities);

§

Infrastructure for Direct Marketing to Consumers/ Processing Units and for Supporting Contract Farming Arrangements between Processing/ Trading Units and Farm Producers

Rate of Subsidy – 25 % of Capital cost of Project – 33.33 % for N-E States, hilly & tribal areas and SC/ST & their cooperatives

Maximum amount of subsidy – Rs.50 lakh for each project. – Rs.60 lakh in case of NE States, hilly and tribal areas and SC/ST cooperatives – No cap on subsidy to State Agencies

Achievements: •

2077 Projects sanctioned subsidy through NABARD & 62 through NCDC.

Construction of Rural Godowns Credit-Linked Assistance: § Launched w.e.f. 1.4.2001 for creation scientific storage facilities to reduce postharvest losses, prevent distress sale, facilitate credit etc. § Subsidy linked to Institutional Credit and available to all Rural Godown Projects of above 50 MT Capacity. § For cooperatives subsidy available for renovation of godowns also.

Rate of subsidy: § 25% of Capital Cost of Project with a ceiling of Rs.37.50 lakh § In NE States/ Hilly Areas and for SC/ST, Subsidy is @ 33.33% with a ceiling of Rs. 50.00 lakh § For Individuals other than farmers & Companies/ Corporations, subsidy is 15% with a ceiling of Rs. 22.50 lakh § Implemented by DMI and subsidy routed through NABARD/ NCDC (for cooperatives)

Achievements: § 15263 Rural Godown projects sanctioned subsidy as on 31.7.07 including 12333 by NABARD and 1271 (new) & 1659 (renovation) by NCDC § 186.51 lakh tonnes of capacity generated through these projects.

Agri-business Development through SFAC § Provide venture capital to qualifying projects with banks participation to facilitate assured market to producers for increasing rural income & employment § SFAC to strengthen backward linkages of agri-business projects with producers, assist farmers, producer groups, and agriculture graduates to enhance their participation in value chain § Project Development Facility to assist producer groups/ Agrigraduates for preparation of bankable projects § VCA @ 10 % of project cost or 26 % of equity or Rs. 75 lakh, whichever is less - higher assistance for filling viability gap in deserving projects on merit with the approval of the Executive Committee. § 102 Projects supported with venture capital assistance in 2005-07

Concept of Modern Terminal Market q

q

Hub-and-Spoke Format: Terminal Market (the hub) to be linked to number of Collection Centres (the spokes) which would be conveniently located at key production centres to allow easy access to farmers & provide advisory services to them. To provide state-of-art facilities for grading, transportation, storage, domestic marketing & export at both the hub and collection centres.

q

To facilitate aggregation, value addition, integrated cold chain, direct marketing, transparency in trading & improved price realisation by farmers

q

PE bidding for min. govt. equity support to be awarded work - up to 49% of government equity participation, including State’s contribution

q

Mainly to cover perishable commodities (could handle non-perishables up to 15% & non - F&V perishables also up to 15%).

Infrastructure:

Modern Terminal Market Banking Institution

Electronic Auction

Processor

Exporter

Wholesaler / Trader/ Retail chain operator

Storage: Cold Storage, Temperature controlled warehouse, Ripening Chamber

Packhouse, Quality Testing Facility, Palletisation

Services: Transport (incl. cool chain), Settlement of Payments, Banking, Market information

Direct Selling

Infrastructure:

Collection Centre

Washing, grading, transport to TM

sorting,

weighment,

Services:

Collection & Aggregation of produce, Settlement of payment, advisory on inputs, prices, quality, multi-modal transport

Producers/ Farmers and their Associations

Expected Outcome of MTMs Parameter

Baseline status

Expected outcome

Trade transparency

Non-existing

Transparent auctions through electronic auction system

Cool chain infrastructure

poor

Setting up of cold storage at each market ranging from 2000 to 15000 MT capacity

Backwardforward linkages

poor

Minimum of 20 collection centers nearer to the farmers field will be set up. The farmer will have alternative options to supply to the supply chains, processing, export of commodities etc.

Monopoly of APMC Markets

prevalent

Farmer is provided with alternative option of taking his produce to terminal markets.

Multiple intermediaries

prevalent

Length of the chain of commission agents will substantially be reduced with an ideal situation of eliminating the commission agents completely.

Beneficiary farmers Share of the farmer in the consumer price

--

16000 to 20000 farmers under each terminal market. Varies from 30 to 50% Farmer’s share is expected to increase to 50 to for perishables 70% of the consumer price. depending on the location, season, demand and supply etc.

Key Expectations from the Private Enterprise q

q

Arrange land for TM & CCs – obtain necessary licences, clearances & approvals Provide envisaged infrastructure at the TM and the CC in the ‘hub- andspoke format’

q

Establish backward linkage with growers in the catchments area of the TM through establishing the collection centers

q

Progressively involve farmers and their organizations in the operation and management of the collection centers

q

Facilitate direct supply to processing units, retail chains and exporters, in addition to auction facility via the collection centers and terminal market.

Key Expectations from the Private Enterprise q

q

q

Provide advisory services to farmers on inputs, prices, quality, multi modal transport and exports. Projects should be designed to handle the required minimum quantity of peak throughput (MT/ day) and yearly handling capacity as prescribed. Private enterprise at liberty to q

q

q

q

Prepare own business model with regard to Size of market and Scale of operation Set up additional facilities to provide complimentary services (input supply, processing, consumer goods etc.) Collect user charges for the infrastructure and services provided

PE shall recover market charges from the users and shall also be free to fix the charges for non-market services but essential services shall be provided free of charge to users unless otherwise specified.

Expectations from the State Government Regulatory clearances: q Single license to operate in the entire State/ adjoining States q

Single point levy & collection of market fee

q

Autonomy in commercial operations of TM

q

Clearance of land use for the TM/ CCs

q

q

Provision of Civic amenities (including drinking water, municipal waste disposal, police security, post office etc) Statutory clearance from • Local authority • Town planning & Urban development • Revenue department

Expectations from the State Government q

Play a pro-active role: Ø Appointment of a Nodal Officer SLEC of under SHM • for selection of PE through open/transparent bidding process & execution of OMDA • to facilitate securing regulatory compliances • to remove difficulties in operation of the project Ø Approval of locations for the TM / CCs Ø Provision of Government land on long term lease, subject to availability and suitability Ø Infrastructure support to TM / CCs • road connectivity, power and water supply etc.

•

States free to participate in the equity of Project through– Direct funding – Land / infrastructure support

Role of the Central Government q

Support the project through participation in its equity capital

q

Terms for financing: q q

q

q

Up to 49% of project equity, including contribution from State NHM/ State will have the option to allocate its equity to farmers organisations actively participating in the business of the project

NHM to finally approve the bidder on recommendation of SLEC of SHM Arrange awareness, panel of FIs & technical support to States through NIAM

Progress of Terminal Market Scheme in Various States/ UTs S N

State

Identified Locations

Whether Govt. Land is Available or PE to arrange land

Whether FI appointed for handholding, give name

Date of publishing Notice for EOI (RFQ)

Date of publishing Notice for Technical & Financial Bids (RFP)

1.

UT of Chandigarh

Chandigarh,

Available Near Sector 39 (W); 42 Acres of Land

Yes Bank

20.01.07

Four Agencies short-listed – RFP Notice issued

2.

M.P.

Bhopal

40 Acres of land is available

Selected

25-5-07, 26-507 & 11-6-07 Corrigendum issued on 16.07.07 & 04.08.07

Pre-bid Conference arranged

Indore

10 Acres of land is available

--do--

Ludhiana

Identified

1-7-07

Hoshiarpur

Identified

Muktsar

Identified

3.

Punjab

Jalandhar 4.

Bihar

Patna

Available Acres)

(50

IL & FS Infrastructure Dev. Corp. Ltd. Selected

Expected soon

Optional for PE to arrange land – Last date for applications was extended up to 05.09.07

Progress of Terminal Market Scheme in Various States/ UTs S N

5.

State

Andhra Pradesh

Identified Locations

Hyderabad

Whether Govt. Land is Available or PE to arrange land

Whether FI appointed for hand-holding, give name

Identified

Nodal Agency changed from AM to Horti. Deptt. & back

Tirupati

Date of publishing Notice for EOI (RFQ)

Visakhapatnam 6.

Maharashtra

Mumbai

Identified (100 acres)

Nashik

Identified

Expected soon

Nagpur 7.

Tamil Nadu

Chennai Madurai

PE to arrange land

Under approval of the Government

Land of APMC

Under process

Coimbatore 8.

Rajasthan

Jaipur

Expected soon

Date of publishing Notice for Technical & Financial Bids (RFP)

Progress of Terminal Market Scheme in Various States/ UTs

S N

9.

State

Karnataka

Identified Locations

Whether Govt. Land is Available or PE to arrange land

Whether FI appointed for handholding, give name

Bijapur

Expected soon

Hubli Channapatna

10.

Orissa

Hassan

100 acre available

Berhampur

Identified

Sambalpur Cuttack

Date of publishing Notice for EOI (RFQ)

land

Proposed for NDDB NIAM engaged for feasibility study by Hort. Deptt

UP & Gujarat have also become recently eligible

Date of publishing Notice for Technical & Financial Bids (RFP)

Agrimart - MACP Model (World Bank) •

Hub and spoke approach - Command area of hub and spoke would be site specific

•

At the hub – – Post harvest activities including sorting, grading, packing etc – Market facilitation – acting as an aggregator of goods for Mandi, Processors, organized retailers, Terminal markets etc.

•

Activities at the spoke – – Agri Input retailing – Equipment hiring – Crates, Machinery – Market led extension services through ATMA – Financial services facilitation – credit, insurance etc. Management –

•

-- Agri-Marts would be initially operated by a local SME and as the project matures they may be managed by producer organizations.

Design of Agri-Mart

Producer Groups

Agri-Mart Produce

n Farmers /

n Value-add

Producers mobilised in groups

n • Inputs • Capacity

development • Credit & Insurance

n

services Sales and marketing support Production and training assistance

Source: Presentation by World Bank on Agri-Mart

ValueAdded Produce

Market information & Market Signals

Buyers n Local

market Distributors Processors

n n n Supermarkets n Export markets

AGMARKNET

Ø Automatic Data Downloading

DMI Hqs.

Ø Data validation

http://agmarknet.nic.in

Ø Crops Directorates (8) [Wheat, Jute, Cotton, Rice, Sugarcane, Millets, Pulses, Tobacco]

Ø Database updation

Ø Technology Mission on Horticulture

Ø Trend Analysis

Ø Coconut Development Board

Ø Monitoring Reports Ø Commodity profiles for production planning Ø Data Warehouse & Data Mining Ø GIS based National Atlas Public Access Local News papers

CDB >2800 Markets

Notice Board / Electronic Board

Mobile Operators

DMI State Offices(27) State Mkts./ Directorates (50)

Farmers

Network

IFFCO

Regional Office

Call Centres Agri-clinics Mobile users

IFFCO Network

Regional Portals (8 already approved)

CDB Network IFFCO

Area Office Area Office

farmers

Area Office

Kiosk

Farmers

Regional Office

Regional Office

Farming Community

Agencies for Strategic Alliance in Agmarknet Agency

Expected Benefit

q

Mobile Phone Operators

Access to millions of subscribers/ Kisan Call Centre

q

IFFCO/ Co-operatives Commodity Exchanges

Access to farmers

q

Krishi Vigyan Kendras

Market led extension to farmers

IT Kiosks / Common Service Centres q

Harnessing technology to reach rural masses

q

Doordarshan/ AIR

Price dissemination

q

Newspapers/ Periodicals

Price dissemination

Thank you (For any further information please contact me at [email protected])