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Food Processing Industries in India: Opportunities Challenges

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Food Processing Industries in India: Opportunities Challenges

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    2. 2 CCEA Approved Component A New Component, in the “National Horticulture Mission” for funding Modern Terminal Market projects for fruits, vegetables and other commodities in Public-Private-Partnership (PPP) mode, in the form of equity participation upto 49% of the Project equity.

    3. 3 Background General Council of the NHM approved the concept on 14.12.05 DPRs prepared for 8 Terminal Markets Expression of Interest was invited for the Projects National Conference on Terminal Markets held on 20.02.2006 to discus with States and Private Enterprises Hon’ble FM announced in the Budget Speech of 2006-07 CCEA approved TMs on 2nd November, 2006

    4. 4 Present Scenario in Value Chain Cost Build Up For One Kg. Basket Of Fruit (Farmers’ share will improve with Terminal Markets )

    5. 5 Domestic markets scenario Infrastructure for marketing of perishables Primary grading/ collection centers - non existent Warehousing and cold storage - inadequate Cold chain - non existent Quality certification system - non existent Transportation for perishables - non existent Rural markets - complete lack of infrastructure Wholesale markets - in government control, lack modern facilities Private / direct markets - limited Post harvest losses: 25 to 30 % in perishables

    6. 6 What is the way forward ? Modern terminal markets: A professionally managed competitive structure To provide market services to farmers at their door step Comprehensive solution to meet needs of stakeholders Auction Processing industry Exports Retail chain and Consumers Requiring high investment and efficient management skills Can be infused by private enterprise

    7. 7 Concept of Terminal market Hub-and-Spoke Format: Terminal Market (the hub) to be linked to number of collection centres (the spokes). Collection centres to be conveniently located at key production centres to allow easy access to farmers Provide state of art facilities for Transparent price discovery (electronic auction), Primary value addition( washing, grading, packing etc), Sourcing for processing and exports, Other services such as banking etc. Commodities to be covered include Fruits and vegetables, Flowers, aromatics and herbs Meat & Poultry Other Commodities

    8. 8 Terminal market Infrastructure: At Terminal Market Electronic auction facility Packhouse Quality testing facility Pallestisation Material handling equipment Cold storage, temperature controlled warehouse, ripening chamber etc. e-trading At Collection Centre Washing, grading & sorting facility for produce Weighing Plastic Crates

    9. 9 Terminal market: Services: At Terminal Market Transport (including cool chain) Warehousing and commodity exchange Transactional Banking services Dissemination of Market information Settlement of payment At Collection Centre Collection & Aggregation of produce Spot payment to farmer at CC Advisory on inputs, prices, quality Multi-modal transport to TM

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    11. 11 Key expectation from the private enterprise Provide envisaged infrastructure at the TM and the CC in the ‘hub- and- spoke format’ Establish backward linkage with growers in the catchment area of the TM through establishing the collection centers Progressively involve farmers and their organizations in the operation and management of the collection centers Facilitate direct supply to processing units, retail chains and exporters, in addition to auction facility via the collection centers and terminal market.

    12. 12 Key expectation from the private enterprise Provide advisory services to farmers on inputs, prices, quality, multi modal transport and exports. Project DPR only illustrative. Project should, however, be designed to handle the minimum quantity of peak throughput (MT/ day) and yearly handling capacity as prescribed. Private enterprise at liberty to Prepare own business model with regard to Size of market and Scale of operation Set up additional facilities to provide complimentary services (input supply, processing, consumer goods etc.) Collect user charges for the infrastructure and services provided

    13. 13 Expectation from the State Government Reforms in APMC Act To allow the private enterprise: Establish collection centres in the catchments area of the TM Source material from farmers’ field directly in the catchment area of the TM Organize supply to traders, retail chain, processing industry and to institutional buyers throughout the country Cold storage/ warehouses of TM to act as delivery point for trading in perishables on the commodity exchanges Pack house of the TM to act as exit point for exports

    14. 14 Expectation from the State Government Regulatory clearances: Single license to operate in the entire State/ adjoining States Single point levy & collection of market fee Autonomy in commercial operations of TM Clearance of land use for the TM/ CCs Provision of Civic amenities (including drinking water, municipal waste disposal, police security, post office etc) Statutory clearance from Local authority Town planning & Urban development Revenue department

    15. 15 Expectation from the State Government Play a pro-active role: Appointment of a Nodal Officer/ Empowered Committee to facilitate securing regulatory compliance to remove difficulty in operation of the project Identification of land for the TM / CC Provision of Government land on long term lease, subject to availability and suitability Infrastructure support to TM / CC road connectivity, power and water supply etc. States free to participate in the equity of Project Direct funding Land / infrastructure support/Covert existing market

    16. 16 Role of the Central Government Support the project through participation in its equity capital Terms for financing: Up to 49% of project equity, including contribution from State State will have the option to allocate its equity to farmers organisations actively participating in the business of the project Private enterprise to be selected through an open, transparent competitive bidding process. Project to be awarded to bidder with the request for minimum Government equity participation.

    17. Salient Features of the Terminal Markets

    18. 18 Outlay in 2006-07 Approved outlay for NHM X Five Year Plan Rs.2300 crore During 2006-07 Rs.1000 crore Outlay for Terminal Markets Participation in Equity Capital Rs.148.00 crore Project Development Assistance Rs. 1.00 crore General Awareness & Publicity Rs. 1.00 crore Total Rs. 150.00 crore

    19. 19 Expected Outcomes

    20. 20 Next Steps Operational guidelines are under issue Appointment of Nodal Officer Selection of number and location of TMs by State Freezing the basic infrastructure for TM Draft RFQ/RFP and DOMA will be circulated Two bid system-Technical & Financial Business plan to be appraised by FI Global tenders Short listing the technically qualified PEs

    21. 21 Next Steps Evaluate Financial bids and submit to National Executive Committee for approval & release equity Entering Development Operation Management Agreement with selected PE Project Execution Monitoring the project through IC Prescribe the infrastructure requirement for new locations NIAM will be the nodal agency for training

    22. 22 Thanks

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    31. Salient Features of the Terminal Markets

    32. 32 Comparison between two methods In Rs. Crores Total cost of the 8 Projects 556 Out flow with 25% back-ended subsidy 139 Out flow with 49% equity participation 136 (with 1:1debt equity ratio)

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