Liquidity crunch likely to hit farm gate level procurement by FPOs

Experts say banks are still hesitant to lend to producers as there is no collateral

Shubendhu Dash, a project director working with a couple of farmer-producer organisations (FPOs) and companies in Nabarangpur district of Odisha, was trying to facilitate the sale of maize procured from farmers to starch and feed meal factories in Chhattisgarh sometime back. Dash says despite his best efforts, the produce did not find many takers as it was costlier than locally produced maize.
 
The reason was simple.
 
While Dash had to pay one per cent mandi tax in Odisha to transport the crop to Chhattisgarh, another 2.2 per cent was levied for selling it there as local tax.