The Hindu Business Line : STC plans foray into commercial crop processing

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New Delhi Jan. 25 The State Trading Corporation (STC) has plans to make a foray into processing segment in commercial crops such as cottonseed oil in order to gain experience and replicate it domestically for greater value addition and better price realisation for other oilseeds.

The Chairman & Managing Director of STC, Dr Arvind Pandalai, told Business Line: "We are planning to go into certain processing operations of agricultural products." Earlier, oilseed processing was done by the corporation primarily with the objective of exporting the extraction, which ceased due to some problems.

Instead of processing this here, he said, "we are teaming with people who have the capability and experience in this area plus some investments from us with the guarantee that we do not make any loss at all".

To begin with, he said the cottonseed oil processing is under way not in India but in the Commonwealth of Independent States (CIS). Under joint agreement with units located there "we will process such cottonseed oil where it is consumed directly".

He said benefits under such arrangement include that "if you are setting up new processing unit or upgrading facilities are available in some place, there is some equipment export which will be through us.

"Second, there would be purchase of throughput which is required for running the unit and that will also be through us — whether it is cottonseed or selling of the oil." This way, he said, the STC took care of trade-related activities, leaving the running of the plant to the owners.

Dr Pandalai said: "We have been in the edible oil business for years. Very soon we will be working on a similar arrangement for edible oil refining and supplying to domestic markets and also to defence."

In the current silver jubilee year of the STC, he said: "We have taken a couple of initiatives to improve the lot of farmers partly through tea auction and partly through our subsidiary companies."

He said a consortium of small and marginal tea producers in the Nilgris had been formed with "our guarantee to take their tealeaf", which they otherwise sell it to somebody else.

"Simultaneously, the corporation has also tied up with processors who only have the processing units and do not have tea. Based on the previous auctions the grower placed in Conoor or Coimbatore, we give him the money the moment he brings tea to the units and gets it converted/processed.

"When it is actually auctioned, he is adjusted afterward on the next lot so that he has a continuous stream of money for running his plantation job and he gets a better return than what he gets by distress sale to somebody. This way small grower is protected and we have 120 people joined up in this consortium," he said.

Unique programme

Dr Panadali said the corporation has also devised a unique programme to put up two processing plant each at a cost of Rs 3 crore for chilli and black pepper in the areas where they are grown.

Storage plant soon

Supported by the Karnataka Government and the Spices Board, STC's first cold storage processing plant for chilli is coming up in Haveri (Karnataka) by April. Here the chilli grower could take some money as advance based on the market price of chilli and alternatively, he could get his chilli processed and keep it in the cold storage to be taken out later for sale after paying service charge for use of cold storage, he said.

The second facility for pepper processing is coming up in Karnataka-Kerala border exclusively for export purposes.

Again, STC has been instrumental in determining the price for cardamom auction for a number of years and the volume has been increasing.

He said this is all an unsecured credit basis but "we never had any single bad debt because of the fact that we are the people who set the price level so that traders won't take the small growers for a ride."

More Stories on : Oilseeds & Edible Oil | Diversification | Storage

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