Financial Daily from THE HINDU group of publications
Tuesday, Dec 16, 2003
Financial Daily from THE HINDU group of publications Tuesday, Dec 16, 2003 |
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Agri-Biz & Commodities
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Events `Centre must desist from fixing rates on agri goods' Our Bureau
Chennai , Dec. 15 THE Central Government should desist from fixing prices of agriculture produce since it skews the market, according to an action plan proposed by Rabo India Finance Pvt Ltd. The Government should also encourage foreign investment in food processing and reduce taxes to enable the industry take on global competition, the action plan said. Addressing the food processing seminar, Foodpro 2003, organised here today by the Confederation of Indian Industry, Rabo India's Director, Ms Sonal Shah, said that despite being a leading agricultural producer, India could not compete in the world market. This was because of its price support mechanism that affected competitiveness in sugar, rice and wheat. Quality was an issue in the case of dairy products. Encouraging organised sector in food retailing will help increase quality, which is a key factor in international marketing. The Centre should support the private sector achieve global scales of operation and upgrade technology. It should do away with reservations that restrict certain processed food products to the small-scale sector. The Government should support farmers through crop insurance and funding support can be routed through the Kisan credit card rather than in the form of minimum support prices. The price support system makes it unviable for the private sector to invest in infrastructure such as grain handling and storage. Encouraging foreign direct investments and letting foreign investors have a controlling stake could overcome funding constraints in food processing and retailing. The Government should support investments in infrastructure that increases efficiency of the supply chain for transferring produce from the farm to the market. Market forces should decide the prices of produce. Companies should be permitted to purchase produce directly from the farmers rather than through the markets. This could be encouraged through contract farming. Fruits and vegetables could be marketed through an auction-based system. Marketing is a crucial feature, and the successes of the National Dairy Development Board and the National Egg Coordination Committee in driving consumption of milk and egg can be duplicated for other products like fruit juices. Such generic promotion would drive growth in food processing. Rabo India is looking at a project that will show case the industry's capabilities in food processing. It is in discussions with the Maharashtra Government to set up a theme park for food processing in which domestic and foreign companies can set up shop. It could be set up in public-private partnership with revenue generated from food courts and entrance, she said.
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