Give direct cash subsidy, focus on food processing in Budget, says Cargill India chairman

End-to-end computerisation of the entire food management system, starting from procurement from farmers, to stocking, movement and finally distribution through Targeted Public Distribution System is proposed.

Siraj A. Chaudhry        Last Updated: February 13, 2015  | 19:49 IST

Siraj A. Chaudhry
Since agriculture and food processing are among the priority sectors for the government, we expect this year's Budget to include policies and reforms that make agriculture market-oriented and provide impetus to food processing sectors to drive inclusive growth.

To reduce hunger and make India a food and nutrition secure country, Cargill supports the government's intent to have a larger role for private players in food grain management as well as the food processing sector. The government should look at pursuing policies that give farmers the freedom to make planting decisions based on market demand signals, and encourage crop diversification towards maize, pulses, and oilseeds. Crop diversification will help to address India's growing nutrition and protein requirements.

It must be realised that farmers need due incentives to raise productivity and overall food production in the country. India also gives large subsidy on fertilisers. We recommend that farmers be given direct cash subsidy and the fertiliser sector can then be deregulated. Direct cash subsidy to farmers will help those who take loans from money lenders at exorbitant interest rates to buy fertilisers or other inputs, thus relieving some distress in the agrarian sector.

A digitised information network will help farmers get information on yields, land records, crop quantity, seed sales, fertiliser requirement, etc. End-to-end computerisation of the entire food management system, starting from procurement from farmers, to stocking, movement and finally distribution through Targeted Public Distribution System is proposed.

The Model APMC Act, recommended by the Central government in 2003, permits direct marketing and contract farming but is not adopted by many states. Where adopted, the states place a number of restrictions, making the changes ineffective. The Budget should facilitate alternative models such as contract/direct farming, cooperatives and farmer producer organisations, to give farmers the freedom to sell directly to private buyers beyond market yards. The Centre should also develop a national unified market for agricultural commodities by removing existing barriers.

There is a need for special focus on food processing to create organised demand for grains so that the private sector can share the burden of investing alongside the government. Specific allocation in the Budget to promote the processing activities in the food sector is recommended. Further, boost from the Ministry of Food Processing by way of schemes for supporting small and medium food processing infrastructure will encourage growth in the sector.

To safeguard the interest of oilseed farmers and support the domestic vegetable oil refining industry, we propose the government increase the differential custom duty between crude edible oils and refined edible oils to 15 per cent. To make India a global food processing hub and align it with the government's "Make in India" initiative, there is a need to enhance regulatory transparency and predictability and adopt science-based international standards.

Ensuring transparent import licensing procedures will facilitate quick movement of products into India, and meet consumer demands more quickly. Barriers to trade and other market distorting policies such as the Essential Commodities Act, quotas, subsidies and mandates, must be addressed along with enhancing the ease of doing business in the country so that food can be produced efficiently and moved freely from places of surplus to places of need. Through seamless integration of activities from farm to fork, people will have better access to affordable, nutritious and safe food.

Siraj A. Chaudhry is Chairman, Cargill India.

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