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LUCKNOW, AUGUST 19: Ram Saran Verma in Daulatpur village of Barabanki district has won national awards for his innovations in agriculture. His expertise in cultivating bananas, tomatoes and potatoes has made him one of the richest farmers in the entire state. Yet he had to throw away 50 crates of premium tomatoes this season, despite having the money, trucks and contacts to sell them.

“There comes a time, when it is more economical to let the tomatoes rot in the field rather than transport them to a mandi,” he explains, sitting in his village connected by a dirt road to the Lucknow highway.

Barely 40 km away, the Mayawati government has signed an ordinance that may transform this business of agriculture which makes Verma consider his loss as fait accompli. In a leap of faith, she has not just amended the Agriculture Produce Marketing Committee Act — which bans private companies from buying directly from farmers — but has also gone several steps further to facilitate private investment in agriculture.

“There was a pressing need to bring this policy. Despite several favourable climatic conditions, UP continues to stagnate. The total arrival in mandis is just 20-25 per cent of the produce. There has been no significant investment in agriculture in the last few years for 91 per cent marginal farmers of the state,” said Shashank Shekhar Singh, state Cabinet Secretary.

The government is clearly thinking big: the move is meant for investors whose minimum networth is Rs 500 crore and are willing to invest Rs 5,000 crore in the next three years. A committee has already been set up to evaluate Expression of Interest, which would detail their business plans that may include buying, packaging, processing and selling agri products in retail stores. Verma’s tomatoes need not rot if there is a processing plant in the vicinity or a refrigerated van to transport them to another market. It would also give more options to the farmers in Samaisi, heart of the okra-growing belt of UP, where the prices plummetted to Rs 1-2 per kg towards the end of the four-month season. This is the way it has been for the last 60 years. But the government hopes to change things with its bid to attract private investment by charting a course which includes:

• Unified approvals: The companies would be allowed to purchase within the entire state without obtaining separate licenses from each area.

• Single window clearance: The companies would be allowed to deposit market fee/ cess in selected mandi of their choice instead of going to several mandis.

• Investors would be allowed to bulk purchase from farmers, store and set up retail chains.

• The government would consider exemption on purchase of more than 12.5 acres of land in the state, as per provisions of the land ceiling act.

• Promises to link villages by roads, power supply and irrigation on a priority basis for the area of operation.

The government is already preparing a model agreement to be signed between the farmer and the investor. Besides providing seeds and other inputs to the farmers, the latter is expected to pitch in with microfinance and insurance, thereby reducing the farmers’ risk factor.

“While attracting investors, we have also kept in mind the interest of farmers,” explained Arjun Abhijat, director, Mandi Parishad. They would have the freedom to sell the produce in the open market if the market price is more. The investor has to pay the farmer on the spot. The companies are required to submit daily details of their transaction with the farmers on the website of the Mandi Parishad.

A dispute redressal system has been set up at the state as well as district level. “In no way is a farmer’s ownership of his land threatened even if there are disputes with the company,” said Abhijat.

Some states who earlier trod this reform path have seen massive opposition from the mandis, which feared loss of revenue once their monopoly was gone. In this case, the UP government has been able to convince their Mandi Board.

“They will not only get additional revenue but will get to act as regulators in the new system,” said Abhijat. The market for agri-produce, which is currently Rs 25,000 crore, is estimated to increase to Rs 65,000 crore. Meanwhile, the investors are waiting and watching. “It is the implementation on the ground that will matter,” said a Reliance executive.