No walk in the park

Food parks have problems, beyond Amethi

A political storm has arisen over the government's decision to shelve a proposed mega food park in Amethi district of Uttar Pradesh. On this occasion, attention is being paid because Amethi is the constituency of Congress Vice-President Rahul Gandhi. But this park is in fact not the only one to have met that fate. Many other such parks slated to be put up have been scrapped or reallocated, with various different reasons given. In fact, only four of around 42 food parks sanctioned since the launch of this scheme by the previous United Progressive Alliance government in 2008-09 have become operational. The approvals for 17 parks were annulled for non-implementation in March this year. These were reallocated to other entrepreneurs or state governments.

Conceptually, the plan to put up mega food parks is a good one. It aims to create clusters of food processing units with all the necessary facilities available at one point. The underlying objective is to promote value-addition and prolong the shelf life of perishable agricultural produce to minimise post-harvest losses - at present, in excess of 20 per cent in fruits and vegetables. However, despite good intentions and the provision of liberal fiscal and other incentives - including the government grant to cover 50 per cent of the project cost (excluding land) - the mega food parks scheme has failed to evoke sufficient corporate interest. The reasons are many. For one, most parks would need 30 to 50 acres of land - difficult to acquire without the active support of state governments, which are often found wanting. Securing bank finance and getting other necessary approvals are also problematic in the absence of facilities for single-window clearance. Besides, it is not easy to get the right kind of tenants or co-partners, basically processors and ancillary players, for these projects. Typically, a mega food park should have 30 to 35 units, including service providers, which are often difficult to put together. The availability of farm produce suitable for processing in mechanised units is another limiting factor, given that most of the traditionally grown fruits and vegetables are normally meant for direct consumption. This would require introduction of new seeds in the raw material catchment areas and adoption of contract farming which is often unsuccessful without government endorsement.

These apart, basic necessities, such as uninterrupted supply of power, gas and clean water, are not guaranteed for many of the proposed food parks. In Amethi, for instance, the government's failure to ensure adequate supply of domestic gas turned out to be one of the stumbling blocks as dependence on costly imported gas was not deemed economically viable by the promoters. Moreover, the idea of shared infrastructure, which may prima facie appear sound, does not always appeal to the prospective entrepreneurs as the needs of different units vary, requiring specialised facilities. The service providers, too, are usually unwilling to set up the required facilities unless they are assured of sufficient year-round business. Unless these issues are looked into, the scheme for mega food parks may not take off properly. Setting up smaller parks for processing one or just a few farm products, which are locally available or can be grown there, may be a better option, rather than going in for mega parks, whose economic viability is subject to fulfillment of too many preconditions.