Reducing Farm Wastage

Context: The recently launched Agriculture Infrastructure Fund should help boost infrastructure in agriculture thereby increasing the overall demand. 

Features of the Fund

• Interest subvention and Credit Guarantee: for the infrastructure projects to be taken up by cooperatives, self-help groups, farmer producer organisations (FPOs), start-ups, and agri-technology players.

• • • Mandated to provide 3% interest subvention for seven years.
    • Up to Rs 2-crore credit guarantee.
• Loan Moratorium: The moratorium on repayment under this programme would vary from six months to two years.
• Preference would be given to setting up cold chains, silos, ripening chambers, assaying, grading and packaging units, and electronic marketing facilities linked to e-trading platforms of mandis or the electronic National Agricultural Market (e-NAM)

Significance of the Fund:

• Reduce Farm Wastage: The paucity of warehouses and cold stores, as also of refrigerated transportation for perishable items, results in huge wastage of farm products.

• For E.g. Dalwai committee on doubling farmers’ income, estimated the average annual post-harvest losses due to poor storage and logistics at over Rs 92,651 crore.

• This panel reckoned that a sizable part of these losses could be averted by spending Rs89,375 crore on developing the needed infrastructure.

• Bolster Farmer’s Income:  It could generate 3 million new jobs in rural and semi-urban areas.

Issues with the Fund:

• Cautious welcome from FPOs and start-ups: They feel that the interest subvention of 3% may not suffice to address their financial woes.

• The banks charge 13-14% interest because these organisations generally do not own any assets to offer as collateral.
• They argue that they should be treated on par with farmers in extending loans at the rate of around 4 per cent.