Showing posts with label stake holders. Show all posts
Showing posts with label stake holders. Show all posts

Thursday, February 6, 2014

FARMERS AS STAKEHOLDERS IN FOOD INDUSTRY?-A PIPE DREAM!

The reported remark by a minister in Tamil Nadu that his government "will" make farmers stake holders in food processing industry makes one laugh or cry depending on how knowledgeable one is regarding the pitiable condition of agriculture and the farmers in India. Concept wise the above statement is fantastic and will be a boon to the farmer if the government can make it work. Unfortunately the minister did not elaborate how this can be done! In a country where farmer suicides are rampant and agricultural productivity one of the lowest in the world, what is required is to strengthen the farming infrastructure in the country before talking about processing the crops into value added products.

Talking about the viability of farming in India, it is nothing but hypocrisy to imagine that all is well in the country because of government's huge subsidy doling and loan waiver schemes during election times. There are many agri varsities in the country which boast of a host technologies for boosting land productivity but only a few farmers get the benefits due to limited funds for extension activities. Added to this water availability is a big constraint and in allocating water resources, industry is invariably preferred over agriculture. The recent revelation that many irrigation projects built in Maharashtra for the benefit of farmers are diverting water to giant distilleries owned by local politicians, bears this out. Major crops depending on rains show variation in production year after year if rain fall is below normal. Under these circumstances how can any one think of integrated food production and processing systems?

If Amul dairy is a success in the case of live stock farming, it is largely due to linking of inputs like feeds, veterinary services and marketing under the aegis of that doyen late Dr FV Kurien. Why the country has not been able to replicate what Dr Kurien achieved during sixties, seventies and eighties of last millenium, is a point worth pondering over. Agriculture Market Produce Marketing Centers (APMC) are supposed to be providing decent prices to the crops brought by the farmers in a transparent manner but these centers are monopolized by mafia groups which manage to cheat the farmers by "ganging up" and through cartelization. Honest business in agri produce in the country is unthinkable under these conditions.

It was with grate fanfare that foreign investment policy was changed to accommodate international retailers in the Indian market. The "hope" was that these retailers will invest billions of rupees to establish the much needed infrastructure to procure, transport, preserve and market the perishable produce through out the country. Why would these players be doing what the government is supposed to do unless they have an agenda to recover their investments through under pricing of the agri corps procured from the farmers to sell the same to consumers at low prices? It does not make any sense to the ordinary intelligence of a citizen in this country!  

There is no evidence to show so far in any part of the world in support of the contention that entry of international retail chains has benefited the farmers. It is true that consumers get products at relatively cheaper rates and this has been attributed to the economy of large scale handling. In countries like USA the land holdings are of huge size and hardly a few thousand farmers have to be dealt with by the retail chains to source their materials. Added to this most farms in the USA receive government subsidies to compensate for low price realization in the market which enable them to sell their produce at lower prices. In contrast India has millions of farmers with average land holding less than an hectare in size and where the agri operations are costly. If these farmers are forced to sell their produce at low prices, they have no other alternative except committing suicide!

Ideally farmers' cooperatives similar to Amul are the answer to make them richer and prosperous like milk producers. But the political class in the country does not allow this to happen because of the fertile ground provided by such societies for grooming politicians! In stead of pumping billions of rupees in the form of subsidies, Government must organize agri cooperatives with each panchayat playing an active role and building up the supply chain with appropriate infrastructure for storage, transportation and terminal markets. The practice of minimum support price must be given up once cooperative organizations start operation in a big way. These cooperatives can always decide what prices are reasonable and plow back the profits to its members. This is the only way to make the farmers stake holders in food industry.

If there are many cooperative dairies working successfully in the county, why such farmers cooperative also cannot work economically making the farmers partners in creating wealth across millions of villages across the country?Just like these dairies, agri cooperatives can build their own cold storage and low temperature transport infrastructure for safeguarding the quality of their produce before delivering the same to the market or set up their own processing facilities to create branded products that can be sold through the existing retail market system or their own retail outlets.

Friday, November 9, 2012

PLATITUDES AND FULMINATIONS-WILL THEY STRENGTHEN FOOD INDUSTRY?

If seminars, workshops, conferences, meetings etc can trigger industrial development, India should have been a top industrialized nation long ago. Every stake holder in food industry development needs to take take brunt of the blame for the present condition of Indian food industry which is more or less monopolized by a few giants with very little elbow room available to the country's unorganized processing sector. During the last 6 decades India must have seen at least 20-25000 seminars and similar types of meetings and gatherings spending millions of rupees and wasting millions of man days. The result is pathetic to see. While Indian banks are flush with money, availability of the same to cottage scale and small scale industries is often constrained by the unwillingness of these financial institutions, most of the being part of Government of India, to take reasonable risks in advancing money to the them. Banks seem to be more enamored by the glitter and reputation of big players for whom money is readily available!

Recent public events organized by the apex business body in India, Federation of Chamber of Commerce and Industry (FICCI) under the banner  Food 360 Degrees, whatever it may mean, is an illuminating example of the mindset in India where holding such events is mistaken for real ground level action. While lot of pains are taken to organize such gatherings with exalted objectives, what is missing is the follow up action on what has been decided at these meetings. According to FICCI, the Food 360 Degree initiative it has taken, is intended to take food industry development to rural areas and interestingly the latest event was organized in Hyderabad, no rural area by any stretch of imagination! Interestingly FICCI claims that "a number of farmers and other stakeholders representing food processing industry" participated in the program though what benefits farmers can derive from such a gathering is not clear. FICCI wants to organize such events in a "toned down" version in 10-12 other places. At best these gatherings, invariably held in 5-star hotels, are nothing but social networking with very little impact on industrial development.

Who does the FICCI represent? How many small industries are part of its system? While there are specialized food industry organizations like All India Food Processors Association or others representing sectors like baked foods, flour mills, fish processing, meat processing etc what can FICCI contribute to the development of food industry? This is not to question the bonafides of this body in organizing such get-together but what needs to be realized is such exercises can have only limited impact at the ground level. Ideally there should be a holistic linkage between the unorganized and small industries and the big players to transfer knowledge and support marketing of products made by the former though it is doubtful whether such a thing will ever happen in India.

It is true that any food industry development in India must take into consideration the inescapable fact that the raw materials or the feed stock for processing industry are generated in the vast hinterland  of the country or the villages which happen to be living place for more than 70% of the country's population. The fact that the food needs of more than 350 million people residing in urbanized regions of the country like towns and cities are to be supplied from agricultural areas cannot be ignored. Naturally the food industry development has to take place in these rural hinterland and not in Hyderabad, Mumbai or Kolkatta. A body like FICCI has very limited role to play in such a scenario with major burden to be borne by governments in the states and at the Center.

Who must bear the responsibility for the gross negligence of rural areas while formulating the food industry development policy? As industry is supposed to be a state subject under the Indian constitution, the primary responsibility does fall on the states but it is also necessary that such developments must be coordinated under a national food industry policy. The Ministry of Food Processing Industry (MFPI) in Delhi is vested with the responsibility to help the states to promote food industry and this ministry has come up with a few funding schemes for disbursement to entrepreneurs or to existing industries to grow further, though how far these financial schemes have served the purpose is a debatable point. MFPI's initiative to set up the brand new food technology research cum management institute under the banner NIFTEM which was recently inaugurated is another issue that can be very controversial. If past experience is any indication NIFTEM also will go the way CFTRI has gone, if the cause for failure of the latter is not properly diagnosed.