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More than the availability of land, the lengthy process to convert a portion of agriculture field for setting up warehouses has been delaying projects, said Sanjay Kaul, Managing Director, National Collateral Management Services (NCMSL), one of the leading agriculture warehouse providers.
Speaking on the sidelines of a function to launch ‘Indian Commodity – Year Book 2013’ on Wednesday, Kaul said farmers are willing to part with their land if one offers a premium, but it becomes difficult to re-register the land for ‘non-agriculture’ usage as each State has its own rules.
Since warehousing is an allied agriculture activity and facilitates better returns for farmers, State governments should relax their norms, he said.
Besides, in most places, farmers want to execute land deals in cash as they do not have a bank account to deposit the cheque. Being a transparent organisation owned by largely banks, it is next to impossible for NCMSL to execute land deals with farmers in cash, said Kaul.
NCMSL plans to set up 45 warehouses across 12 States with an investment of Rs 300 crore. Despite various shortcomings, NCMSL is close to completing five warehouses – three in Madhya Pradesh and one each in Andhra Pradesh and Rajasthan.
NCMSL will increase the average warehouse size to 10,000 tonnes from 2,000 tonnes, it operates currently. It has Rs 6,000-crore asset under management at its warehouses in 952 locations.
The company also plans to set up cold storages one each at Guntur and Nizamabad in Andhra Pradesh and Sangli in Maharashtra. It has already acquired land in Andhra Pradesh and expects to complete the work in five months.
Lack of assurance on undisturbed power supply is the major hindrance for corporate investments in cold chain as electricity constitutes 60 per cent of the cost of operating a cold storage facility, said Kaul.
On the proposal to allow FDI in retail, Kaul said though the move will benefit farmers, the Indian manufacturers will have to face the challenge of cheap imports eating into their market share.
“Concern over mom and pop stores being wiped out is unwarranted as they will innovate and cannot be bullied into submission by the biggies,” he said.
>suresh.iyengar@ thehindu.co.in
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