Sisir Mishra
Post News Network
Bhubaneswar, July 9: The Food Corporation of India (FCI) has plumbed for larger players in the private space over small and mid-sized companies to be roped in for procurement of food stocks in the eastern region of the country as part of Minimum Support Price (MSP) operations.
In a draft proposal sent to the government of India, the corporation reportedly has laid down tough conditions and eligibility criteria which may benefit deep pocket firms like Adanis, Cargill and ITC among others.
Soon after coming to power in May last year, the Narendra Modi government had set up a committee headed by former Himachal Chief Minister Shanta Kumar to suggest changes in the functioning of FCI and its eventual revamping.
Among its recommendations, the committee sought a larger role for private players in the MSP operation space including procurement, warehousing and other post-harvest handling of stocks. The committee highlighted the need for introducing private players in the eastern region of the country.
Involvement of private players was felt necessary as with the shrinking of manpower, FCI is not able to open procurement centres in remote and distant centres resulting in distress sale of paddy and wheat by farmers, sources said.
In light of these recommendations, the FCI conducted a workshop on ‘engagement of private players in MSP operations’ at its headquarters in May this year.
The corporation has recommended a minimum turnover of `200 crore and a profit of at least `5 crore during last three years as criteria for private players to participate in the tender process. If, implemented, the move will foreclose the participation of small and medium players who have expertise in these fields. This may also make it easy for non-serious players with trade as well as procurement interests to enter this work and make a killing, experts opined.
In an earlier avatar, procurement policy clearly debarred companies with interests in trading in foodgrains citing conflict of interest. Such exclusivity has been given a decent burial in the new policy which may create a situation where the private players may decide to offload the procured stocks in the open market at a premium.
Another condition that would stifle small and medium players is the requirement to have a credit linkage of minimum `150 crore during the current financial year. While doing this, the corporation seems to be oblivious of the fact that a bigger credit load will bring in additional burden on the company which would eventually result in higher rates for bids.
Analysts observe that allowing select deep-pocket players in sector as sensitive as MSP procurement will kill competitiveness and encourage monopoly. This will also prove anti-farmer as the latter will not have many options before them while disposing stocks.
Big Boys’ Club
– As per a draft proposal of FCI, the corporation has recommended a minimum turnover of `200 crore and a profit of at least `5 crore during last three years as criteria for private players to participate in the tender process
– If implemented, the move will foreclose the participation of small and medium players who have relevant expertise in these fields
– Analysts observe allowing select deep-pocket players in a sector as sensitive as MSP procurement will kill competitiveness and encourage monopoly
