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| Few takers for FCI offer to pay for private storage |
| Komal Amit Gera / Chandigarh May 26, 2010, 00:51 IST |
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There has been only tepid response for the Private Entrepreneurs Godown Scheme (PEG-2008) floated by Food Corporation of India.
FCI requires space for storing an additional 12.76 million tonnes of wheat, of which 11 mt is coming from Punjab and Haryana. Given the non-availability of space, FCI may be compelled to transport the surplus to Rajasthan, Gujarat, Maharashtra and Madhya Pradesh for storage.
The official said open plinths can be created in those states to store the wheat in a good condition at a more affordable cost. As the cost of land in Punjab is high, moving wheat stocks to other states makes more sense, said an FCI official.
The exact quantities and destinations would be decided at a high-level meeting of FCI in the first week of June.
In a final effort to organise the required storages, the states concerned have been advised to hire public relations’ agencies for aggressive advertising and dissemination of information to engage the required capacities for storage. Over 80 per cent of the capacities are required to be created in Punjab and Haryana, so both states are high on the FCI radar.
Punjab need to add storage capacity of 7.12 mt and Haryana another 3.88 mt. The balance of 1.76 mt has to be created in Jammu and Kashmir, Himachal Pradesh, Bihar, West Bengal, Rajasthan, Gujarat, Maharashtra, Kerela, Tamil Nadu and Andhra Pradesh.
FCI says it is worried at the tardy pace of hiring private participants, to be initiated by the state-run agencies, PUNGRAIN (Punjab State Grain Procurement Corporation) in Punjab and Hafed (Haryana Supply and Marketing Federation Limited) in Haryana.
At at its own level, it has been coordinating with national industry associations like Assocham and Ficci to mobilise the private participation.
In Haryana, Hafed is mulling whether to organise road shows to attract the private players.
A senior official in FCI said escalating land cost has been a prime factors for inhibiting entrepreneurs, besides discontinuation of subsidy on construction earlier provided by Nabard (National Bank for Agriculture and Rural Development) and a service tax of 10.3 per cent on rental income.
An entrepreneur in Punjab told Business Standard the FCI would enter into an agreement for seven years. If it does not revise the agreement, he would be in jeopardy because land cost is sky-rocketing in the region. There are better alternatives like real estate to utilise the land and get higher returns, than indulging in a proposition that has uncertain returns after seven years, as the life cycle of a godown is 30 years. So, entrepreneurs are shying away from tying up with FCI.
The state of Punjab received tenders for storing 7,35,000 tonnes, of which tenders for 3,12,000 tonnes have been referred to the high-level committee of FCI. The tenders for the rest were disqualified on technical grounds.
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