Agriculture ministry releases framework for PPP under ‘Rashtriya Krishi Vikas Yojana’

Agriculture ministry releases framework for PPP under ‘Rashtriya Krishi Vikas Yojana’
The agriculture ministry has released a framework for public private partnership (PPP) in agriculture under the Rashtriya Krishi Vikas Yojana (RKVY).
The guidelines issued by the Ministry are the outcome of several rounds of consultation held with States, industry bodies and experts.
Titled “Framework for Public Private Partnership for Integrated Agricultural Development (PPPIAD)“, the circular provides an enabling mechanism for States to team up with private sector players to achieve targeted goals in various sub-sectors of agriculture.
Small Farmers’ Agribusiness Consortium (SFAC), an arm of the Agriculture Ministry, has been nominated as a National Level Agency to provide technical support and facilitation to states and corporates.
However, the final decision on the type and number of projects to be supported under PPPIAD has been left entirely to the States.
PPPIAD aims to harness the management and technical capabilities of private sector companies to integrate targeted clusters of farmers into the agri value chain. Project proposals are expected to offer end-to-end solutions, from production to marketing and value addition.
The scheme envisages an average investment of rupees one lakh per farmer, with approximately fifty per cent being provided by the government and the rest to be mobilized by the private partner.
Each project is expected to run between three to five years and cover a minimum of ten thousand farmers. A Results Framework Document (RFD) will be signed by the private partner with the state government, clearly defining outputs and verifiable indicators, thus making monitoring simple.
Several corporates have shown keen interest to participate in the pilot. With the formal notification of the Scheme, the Ministry expects over two dozen proposals to be submitted to various States in the next couple of months.
During the consultation stage companies with interest as diverse as seed production, dairy, cotton, micro irrigation and fresh vegetables filed concept proposals under the Scheme.
Many of them said that the PPP window could prove to be a game changer for agriculture and directly address the twin challenges of raising productivity and market access resulting in enhanced farmer incomes.
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Farm ministry has new scheme to woo private players. Is it good enough?
By M Rajendran

A new framework released this week by India’s ministry of agriculture to encourage private-public partnerships may open up opportunities for entrepreneurs in the farm sector. Under the new scheme, which was notified in a circular dated August 16, such PPP projects will be supported by government funds provided to states under the Rashtriya Krishi Vikas Yojana (RKVY). The scheme envisages an average investment of Rs 1 lakh per farmer, half of which will have to be put up by the private partner. Sounds straightforward enough, but not quite.

“The authors of the scheme are far from ground reality. The costing doesn’t make it an attractive proposition for the private sector,” says Vijay Sardana, an independent agri-economist based in Delhi. The incentives under the scheme, for instance, would not cover the overhead costs of such projects. The primary sticking point though is that the scheme, dubbed the Public Private Partnership for Integrated Agricultural Development or PPPIAD, leaves the final decision on the type and number of projects to be supported entirely with state governments. At the national level, the Small Farmers’ Agribusiness Consortium, an arm of the ministry of agriculture, has been nominated to provide technical support and facilitation to the states and public sector players.

Each project is expected to run between three years and five years and cover a minimum of 10,000 farmers. To keep tabs on performance a results framework document (RFD) will be signed between the private sector partner and the state government. Sardana has a suggestion: “Offer private players a single window special tax clearance for their work under PPPIAD and see the magic.”

But why is the government out to woo private players into the farm sector, considering that it has been quite the opposite in other core sectors such as telecom, energy, roads and aviation?  The answer lies in a certain few segments that drive GDP in agriculture. Some of the favourites include horticulture, animal husbandry, dairy, poultry and fish products. By the ministry’s own estimates, such products contribute about 75 per cent of the country’s agriculture GDP today. Small and marginal farmers favour these segments since they are labour intensive, offer quick returns and can engage a higher proportion of women.

Overall PPPIAD appears well-intentioned and could serve a boost to new and existing private players, particularly rural sector focused startups. Take for instance, Pune-headquartered Trimurti Corns Agro Foods, a seven-year old company that grows and processes a range of products including exotic frozen vegetables, fruit juices and fruit pulp. It started working with 168 farmers around the region and now has backward linkages with over 2,000. But establishing those market linkages took time and some work because the company came up against technical problems in managing the post-harvest produce. The presence of a well-equipped food processing company at the time would have enabled it to scale up faster.

The PPPIAD could help alleviate such problems for future entrepreneurs, if private players can be incentivized enough to get into the sector and build an ecosystem. However, the obvious problems with the scheme and its implementation need to be ironed out first.