Central Sector Scheme for Development / Strengthening of Agriculture Marketing Infrastructure, Grading and Standardization

Changing Scenario in Agriculture Transition from Food Shortage and import to self sufficiency and export Subsistence Farming to Intensive and technology-led / commercial cultivation At present India is the leading producer of many crops in the world

Some Facts……… India is among top few producers of many agri. commodities in the World - Yet share in World Food Trade is only 1.6% Post harvest value loss of F&V is 25-40% (value above Rs. 30,000 crore)- Yet less than 2% only is processed. About 250-300 million people have adequate purchase power of processed agri. goods- Yet value addition to agri. produce is below 7%.

Projections of Agri. Production Million Tonnes 604.62 494.22 405.69 799.82 652.25 533.86 Total 402.07 334.79 278.79 432.80 360.68 300.10 Sugarcane 36.88 24.92 16.86 46.33 31.31 21.18 Oilseeds 165.67 134.61 110.04 320.69 260.26 212.58 Food grains 2011-12 2006-07 2001-02 Marketable Surplus Production Commodity

Agri-Markets in India (as on 31.03.2006) 6680 Wholesale Markets in India (majority are regulated markets) 21671 Rural Primary Markets (about 15% are regulated markets) (Total – 28351) 2429 Principal Regulated Markets and 5137 Regulated Markets Sub-yards (Total – 7566) (Govt Promoted organised marketing through a network of regulated markets)

Present Scenario- Karnataka 144 Main Markets and 343 Sub Markets About 94 cold storages with storage capacity of 3.70 lakh MT Storage Capacity of godowns is about 22 lakh MT The storage capacity is inadequate Existing markets are deficit in infrastructure

Objective of Regulated Markets Ensure reasonable gain to the farmers by creating favourable environment in markets for fair play of supply and demand forces. Regulate market practices and attain transparency in transactions Aimed at providing proper method of sale, correct weighment, prompt payment and various marketing related services

Performance of RMs RM provided physical facilities and institutional environment RM achieved limited success in providing need based amenities and services conducive to efficient marketing. Rural periodic markets in general and tribal markets in particular, remained out of its developmental ambit

Performance of RMs RM became restrictive / monopolistic markets and no help in Direct marketing / organised retail trading Adoption of innovative marketing system Promoting competitive marketing Hence, the need for efficient marketing to provide incentive for enhanced production, to foster competition and to eliminate exploitation of farmers

Infrastructure Needed in Ideal Market – A) Core Facilities Platforms for Automatic weighing Auction Platforms Packaging & Labeling Equipments Drying Yards Loading, Unloading & Dispatch Facilities Grading Facilities Standardization Facilities Price Display Mechanism Information Centres Storage/Cold Rooms Ripening Chambers Public Address System Extension and Training to Farmers

Infrastructure Needed – B) Support, Service & Maintenance Water & Power Supply Veterinary Services Sanitary Facilities Banking & Communication Input supply Repair/Maintenance Service Office / Rest Rooms Computerized Systems Rain Proofing Sheds for Animals Market Education Soil Testing Facilities Drainage / Parking Cleaning and Sanitation Garbage Collection & Disposal Waste Utilization Vermi-Composting Bio-gas Production/Power

Domestic Market Scenario Only 2/3rd of regulated Markets have covered / open auction platforms Only 1/4th of markets have drying yards Cold storages exist only in 9% of markets Grading facilities in less than 1/3rd of markets Basic facilities like internal roads, boundary walls, electric lights, loading & unloading facilities, weighing equipments etc. not available in nearly 20% markets Cold Chain – Non –existent

Domestic Market Scenario Quality Certification system, transportation for perishables – non existent Rural markets – lack basic infrastructure Whole sale markets – lack modern facilities Private / Direct markets for agricultural commodities – Not permitted

Reforms through Model APMC Act Setting up of special commodity markets PPP in management & extension activities/ Promotion of e-trading Encouraging professional management in APMCs Provisions for Contract Farming Single point levy of market fee/ Single point registration of functionaries Establishment of Private markets/ Farmer-consumer markets/ Direct marketing Powers to State Government for exemption of market fee Setting up of State Marketing Extension Cells/ State Agricultural Produce Standards Bureaus.

Central Sector Scheme- Operational Guidelines

Aim……… To attract large investments for the development / strengthening of Agriculture Marketing Infrastructure in the country and Promotion of Grading and Standardization “By offering a package of Incentives

Objectives Provide additional infrastructure to meet the large expected marketable surpluses Promote competitive alternative agriculture marketing infrastructure by inducement of private and cooperative sector investments Enhance efficiency of existing agriculture marketing infrastructure Promote Direct Marketing, reduction in intermediaries and handling channels, thus enhancing farmer’s income

Objectives Provide infrastructure facilities for grading, standardization and quality certification of agriculture produce - Assured price to farmers commensurate with the quality Promotion of pledge financing and marketing credit, introduction of negotiable warehouse receipt system Promotion of forward and Future markets so as to stabilise market system and increase farmer’s income

Objectives Promote direct integration of processing units with producers Create awareness and provide education and training to different stakeholders in the marketing chain

The Scheme Credit linked back ended subsidy on capital cost of general or commodity specific infrastructure for marketing of agricultural commodities and for strengthening and modernization existing markets Linked to reforms - States to amend APMC Act to allow direct marketing and contract farming and to permit setting up of markets in private and cooperative sectors

Marketing Infrastructure Functional Infrastructure for assembly, grading, standardization and quality certification, labeling, packaging, value addition facilities (without changing the product form) Market user common facilities like market yards,platform for loading/ assembling and auction of the produce Infrastructure for direct marketing from producers to consumers / processing units / bulk buyers, etc

Marketing Infrastructure Infrastructure for e-trading, market intelligence, extension and market oriented production planning Mobile infrastructure for post-harvest operations (excluding transport equipment. Refrigerated vans are eligible as a part of cold chain.)

Indicative Projects Agriculture Sector Cleaning, Grading units for Maize, Ragi, Pulses, Paddy Primary Processing Plant, Seed Cleaning Centres, Packaging, labeling and coding units, Automatic produce handling plants, Quality Control Labs at block/ district/ division and State level, Drying yards/ automatic bulk dryers, Electronic weighing centres, Information Kiosks, E-trading units, Commodity-Specific Markets, Hermetic Storage- Mobile Cocoons, Modernization of Agriculture Produce Markets, Covered Stores- Establishment of Farmers Markets, ICT Infrastructure Agriculture Extension, Infrastructure for Contract Farming, etc.

Indicative Projects (contd) Horticulture Sector Cleaning, Grading Waxing and Packaging lines for Grapes, Mango, Pomegranate, Sapota, Cashew Primary Processing Unit, Cold Storages, CA, MAP Storages, Pre- Cooling units, Cold chains including refrigerated Vans, Ripening Chambers, Curing Chambers, Drying yards, PACK Station (Collection centre), Quality Stations, Pack Houses, Modernization and Establishment of Fruits & Vegetable Markets.

Indicative Projects (contd) Livestock Establishment of Livestock Market. Modernization of existing market, Fodder Banks, Mobile Fodder Banks, Baling Press, Egg Storage Centres, etc.

Indicative Projects (contd) DAIRY Milk Collection Centre, Milk Quality Testing Lab, Automatic Milching Machine,, Chilling Centre, Bulk Chilling Unit, Pasteurisation Plant, Milk Packaging Unit, Refrigerated van for collection and distribution. FISHERIES Chilling Plant, IQF Plant, Fish Storage & Markets. Fishing nets, fiber glass fishing boats, Tuna long liners/ boats

Indicative Projects (contd) APICULTURE Honey Extraction Unit, Collection Centre, Bulk Storage Units, Honey Processing Units, Wax Separator and Collection Unit. MINOR FOREST PRODUCE Bidi Leaf Collection Centre, Bidi Leaf Primary Processing Centre, Shikakai, Saponion Collection Centre, Gum Collection Centre, Gum Refinement Unit, Tamrind Seed Extraction Unit.

Eligibility Individuals Groups of farmers / growers / consumers Partnerships / Proprietary Firms / Companies / corporations Non-governmental organisations Cooperatives, Cooperative marketing federations Local bodies APMCs Marketing boards

Eligibility State Agencies where projects for strengthening / modernization of existing marketing infrastructure are bank-assisted (incl. Projects co-financed / refinanced by NABARD)

Land and Location Any Place of choice determined on the basis of economic viability and commercial considerations Project should provide “direct” service delivery to producers in post-harvest management / marketing of the produce Land Cost – Restricted to 10% (Rural ) / 20% (urban) of project cost – part of promoter’s contribution Land not to be alienated during loan period for any other purpose

The Financial Assistance Would be credit linked and subject to sanction of project by commercial banks / cooperative banks / RRBs Would be on only capital cost of the project Financing institutions however are free to finance other activities, working capital requirements

Subsidy 25% of cost subject to a max Rs 50 Lakh 33.33% of cost subject to a max Rs 60 Lakh in Hilly areas and to those belonging to SC/ST and their co-operatives No upper ceiling for projects of state agencies Assistance availed from any other scheme shall be deducted

Release of Subsidy NABARD – for projects financed by Banks and other institutions eligible for refinance from NABARD NCDC – for projects financed by NCDC and coop banks recognised by NCDC Implemented by Directorate of Marketing & Inspection, Ministry of Agriculture (DMI)

Rest of the project cost Rest of the project cost Funding Pattern Rest of the project cost Rest of the project cost Owner’s Contribution Min 46.67% Min 50% Institutional loan from banks, etc 33.33% 25% Subsidy from Central Govt. NE States, hilly and tribal areas / SC & ST entrepreneurs & their co-operatives Other than NE states, hilly and tribal areas Source of Finance

Mode of Release of Subsidy 50% of eligible subsidy will be released to the participating bank in advance by NABARD on receipt of project profile-cum-claim form Remaining 50% on completion of the project and after inspection by a committee comprising of NABARD, participating bank and DMI For the project with project cost upto Rs 10 lakh one time subsidy shall be sanctioned based on the financing banks inspection report. No JMC for these projects.

Repayment & Completion Repayment Period – 11 years incl. 2 year grace ROI – PLR of the bank as per RBI guidelines Time Limit for completion – 18 months from the date of disbursement of first installment of loan Additional grace period 06 months may be allowed, by the financial institution, if reasons are justified

Repayment & Completion For large integrated projects involving TFO of Rs 2.00 crore or more and requiring phasing, time limit of 36 months may be prescribed In case project is not completed within stipulated period, benefit of subsidy will not be available and advance subsidy released will have to be refunded forthwith

Other Requirements Banks to adhere to their own norms for appraisal of project, credit risk, etc. Banks to create awareness among branches for implementing the scheme. Subsidy claim to NABARD to be preferred only as per prescribed Format SLBC/DCC/BLBC to review progress Before recommending, controlling offices to scrutinize the project for eligibility and ensure enclosing all required documents/ details.

Progress under the scheme ( As on 31.1.2009) No of schemes sanctioned :12 Total eligible subsidy : Rs 48.60 lakh Released : Rs 9.34 lakh Main purposes : Drying Yards, Weigh Bridges and Combine harvesters

For further details Log on to www.agmarknet.nic.in Or Contact Directorate of Marketing and Inspection (DMI), Bangalore (Tel : 080- 23473004 ) Or NABARD, Karnataka Regional Office, Bangalore (Tel : 080-22225244 ) Or National Institute of Agricultural Marketing (NIAM), Jaipur (Tel : 0141-2770589 / 2795105) 9342596812