Maharashtra woos corporate farming

Corporate farming is set to get a boost in Maharashtra with the state government taking a decision in principle to give blanket approval to private companies to directly purchase grain, fruit and vegetables from farmers.

The state government has so far given approval on merit for contract farming to select companies like ITC, Radhakrishna Foodlands and the South Africa-based Shoprite.

The decision to end the monopoly so far enjoyed by the state government-run agricultural produce marketing committees is expected to be taken at a Cabinet meeting on June 15.

Several companies, including the US-based Cargill group, have  been waiting for such permission for a long time now. Confirming the move, a senior state government official said: "The move will allow a level playing field between the APMCs and private companies. This will result in huge improvements in the quality and availability of agro produce. More importantly, farmers will get competitive prices."

Explaining further, he said while transportation costs were a major reason why farmers were forced to sell their produce in the local APMCs at low prices, the opening up of the sector would bring the companies to the farmers' doorsteps.

Companies will be required to pay the same 0.90 per cent on every 100 kg of produce purchased from farmers to the state government as the APMCs do.

Tobacco giant ITC and the Radhakrishna Foodlands group were issued licences exempting them from the provisions of the APMC Act by the state government in December 2003.

ITC was initially allowed to grow maize and soyabean in the Vidharbha region (Chandrapur, Buldhana, Nagpur, Yavatmal). Subsequently in 2004, the company was permitted to operate throughout the state.

Similarly, the Radhakrishna Foodlands group was given a free run of the Mumbai, Panvel and Kalamboli belt. Both entered into arrangements with farmers providing seeds, fertilisers and even credit.

By the end of the first six months of 2004, ITC had purchased agricultural produce (mostly soyabean) from farmers worth about Rs 12 crore (Rs 120 million).