‘Need to promote food processing industry to help farmers’

Creating a positive image for food processing industry, removing discriminatory taxes on certain processed food items and scrapping laws enforced ostensibly to protect consumer interests are some of the measures that the government needs to take to improve farmer incomes in the country.

Captains of industry who participated in a round table organised here by the FICCI on Tuesday deliberated on short-, medium- and long-term measures need to be taken to improve farmers’ flight in the country and submitted their recommendations subsequently to the Union government.

Siraj Chaudhry, Cargill India Chairman, who briefed a gathering chaired by Union Agriculture Minister Radha Mohan Singh, said increasing domestic consumption was key to ensuring that the farmers are getting right price for their produce.

Irrational GST slabs

Chaudhry said “When we set out for GST regime, the processed food, to a large extent, was seen as food to be consumed by the well-to-do and therefore needs to be taxed. There is a need to revisit the whole debate. I am sure there is a rationale for taxing branded staples relative to loose staples. But it goes against the people who are investing in capacities and brands to carry more staples in safe and more hygienic manner,” Chaudhry said. As an example of lop-sided taxation policy, Chaudhry cited the case of ghee. “Isn’t it time for India to revisit the GST on ghee, which is taxed at 12 per cent, when it is now accepted as a health food world over,” he asked.

A lot of investment in the food processing sector remains flat with many major players operating at capacity levels. Affordability of a lot of food processing companies is not very good, he said.

Similarly, reflecting on what Indian industry thinks about implementing stringent food standards, the Cargill India chief said the country was enforcing standards that are more suitable for the western countries.

He also said that stringent plastics ban, proposed by the States such as Maharashtra will affect food processing industry.

Inefficient system

S Sivakumar, who heads ITC’s agri-business, said, “the attempts to improve farmer incomes through committed procurement or price differential schemes, without impact consumer price index, may appear as a challenge. There are two types inefficiencies in the market because of which farmers do not get the right price. Immediately after the harvest, the prices are low but as the year progresses the prices go up. How do we bring in future prices into the current market so that the difference between MSP and actual market price reduces. The second inefficiency is the difference between the consumer price and market price,”he said.

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