Ministry sets farm infrastructure scheme rolling

Viewed as promising handsome gains for farmers,the idea found a favourable response from the Ministry. The Asian Development Bank has been roped in to fund the initiative called the Agribusiness Infrastructure Development Investment Programme (AIDIP),for Maharashtra as well as Bihar. The 1,000 crore proposal will come before both state cabinets next month.

The AIDIP aims at establishing value chains that would have the farmer at one end and the consumer at the other with big corporates in the middle to establish various linkages like aggregation,sorting,grading,packaging and storage facilities,value additions like processing and distribution including logistics. Assured linkages to efficient markets with transparent pricing are expected to benefit the farmer.

The project will work as a hub-and-spoke model where existing players will have a chance to become a part of the new regimen. There will be a main collection centre at the chain headquarter linked to many smaller centres in rural backyards. The project aims to fetch an investment of about Rs 600 crore from private sector and Rs 400 crore will be provided by the state government as fund to fill in the “viability gap”. “The viability gap is the difference between the range of profitability and loss. Since the project will take a few years to be financially stable,the government will fill this gap by paying towards capital cost as some kind of a subsidy to make it viable,” said a senior official. “Centre has been funding projects for viability gap for other infrastructure projects. The Maharashtra government has approached it for the same for agriculture sector too. If accepted,it will be for the first time that this will happen,” the official said. The government will itself draw the fund from ADB which is funding to the tune of about Rs 1,100 crore ($170 million) at a mere 0.5 percent interest rate. The land for infrastructure development will be provided by the government.

“The project is expected to become financially stable in about seven years and be on its own after that. After the private sector operates it for twenty years,it will be handed back to the government,which later may lease it out to some other or the same private player,” the official explained. The idea is to raise many such value chains across the state. They could cover belts like Pune-Nashik,Aurangabad-Amravati and Nagpur and east Vidarbha. “But it is basically the backward regions like Marathwada and Vidarbha,which will be the focus of such chains. There already are some purely private sector chains in western Maharashtra,” he said.

“Due to infrastructural facilities like cold storages and cleaning and grading facilities,wastage will be cut drastically. So,the value chain operators will be able to give more remuneration to farmers. Farmers will be encouraged to grow high-value crops like fruits for high-end,niche consumers who prefer to buy them from malls,which also will fetch them better prices,” the official said. Also,there is the $ 3 million Japanese Fund for Poverty Reduction which will be equally divided between the two states for backward integration of small and marginal farmers into the project. “Producers’ groups will be formed. Farmers’ co-operatives and self-help groups will bring the produce to the value chains,” the official added.