CACP suggests PPP model for food grains procurement

The Commission for Agriculture Costs and Prices (CACP) has suggested the government rope in the private sector along with state agency FCI for undertaking procurement of foodgrains from farmers. "If we are thinking of public-private partnership (PPP) model in building warehouses, why don't we have a PPP model in food grains procurement also? This is the biggest idea that the commission is floating to the government," CACP Chairman Ashok Gulati said in an interview to PTI.

The PPP model is necessary to enthuse competition to the FCI, which has not been able to procure foodgrains at Minimum Support Price (MSP) level in many parts of the country, he said. The entry of private sector will not only enable farmers get MSP but also solve storage problems, Gulati said. "Let the farmers decide whom to sell their produce. The government can open up the procurement operations to private companies like ITC, Hariyali Kisaan Bazaar, Tatas and Birlas and also cooperatives like IFFCO and Nafed”, he said.

The CACP has made this suggestion in its recent report submitted to the Agriculture Ministry Founded in 1965, it is a statutory body and advises the government on the pricing policy for major farm items. Gulati recommended the government allow the private sector into procurement operations on the same terms and conditions given to Food Corporation of India (FCI). "If private firms do better job than FCI at lower cost that would be their profit. The Centre should just give the FCI cost and ask companies to deliver foodgrains wherever the government requires,"he said.

Presently, procurement and distribution of foodgrains is being undertaken by the FCI on government's behalf. It procures on an average around 55 million tonnes of rice and wheat through more than 14,000 procurement centres annually. Gulati pointed out the FCI has still not set up procurement centres in many parts of the country. As a result, farmers are compelled to sell below the MSP. For instance in Eastern Uttar Pradesh, wheat is being sold at Rs 1,020 per quintal, against the MSP of Rs 1,120 per quintal."If the real market price is below the MSP, there is something seriously wrong”, he said.