Centre for corporate contract farming to boost rural sector

Eyeing the much desired growth acceleration in the farm sector, the Union government is open to expansion in corporate contract farming, Minister of State for Food Processing Subodh Kant Sahai said.

"We are open to corporate contract farming," the minister said in an interview.

While domestic corporate bigwigs such as Reliance and Bharti have already taken up the contract farming route to feed their retail chains, global majors Wal-Mart, Tesco and Carrefour are also eyeing foray into India retail.

Corporate contract farming has taken off in states like Punjab, Haryana, Maharashtra and Gujarat. Providing the private sector a more level playing field would help raise the country's overall farm goods' processing level, he said.

So far, 17 states have made a provision for contract farming in their respective Agricultural Produce Marketing Committee Act to provide legal framework.

In seven more states, there exist no regulatory laws preventing such an arrangement. "Farm to factory is the mantra," Sahai said.

India's is world's second largest producer of fruit and vegetables. Its annual post harvest loss on fresh fruit and vegetables on lack of processing facilities has been pegged at Rs 40,000 crore.

He prescribed market-oriented farming to minimise post-harvest loss. Large-scale corporate farming will also lift the food processing sector.

During the 11th Five Year Plan (2007-12), the growth target for the food processing sector is 7 per cent, while agriculture sector is seen growing only at 4 per cent.

"Every bit of farm produce should be viewed as processing raw material," Sahai said. India aims at raising the level of food processing in farm products to 20 per cent by 2015 from the current 6 per cent.

Underscoring the critical role of states in raising the country's overall food processing level, the minister said, "States should adopt a fresh look at their agricultural policy."

The ministry has written to all chief ministers to accord high priority to food processing in a bid to raise rural income.

"Post harvest management and food processing should be made an integral part of state's agricultural policy," Sahai said.

States should take a fresh look at making food processing an indispensable part of their overall farm policy, he said.

The government has convened a national conference of state food processing ministers next month to deliberate on the issue, the minister said.

In a major fillip to the nascent food processing industry, the Central government plans to extend 50 per cent grant to food testing laboratories, he said. "Food processing units setting up quality testing labs can receive central grant up to 50 per cent on its project cost," Sahai said.

During the 10th Plan period, central grant up to 33 per cent was extended for such food testing laboratories, which has now been scaled up to 50 per cent under the current Plan. "Raising this limit will give big push to quality."

Such laboratories would help processed food exporters comply with global quality standards more efficiently, Sahai said. About 100 such laboratories would be set up during the first half of the 11th Plan, he said.

In this respect, quality testing labs for organic food would receive top priority, he said as "organic food products have a huge market in the western countries", especially those in Europe.