“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.