Nafed would further its service and commitment to the nation.

1. Nafed would further its service and commitment to the nation.

2. Mission: Farm Gate to Home Gate Focus: Infrastructure

3. Farmers are at the receiving end both while procuring inputs and selling produce Need innovative business models to help farmers realise better returns Even while the prices of agricultural commodities are ruling sky high, farmers are not benefiting from it. Being small producers, they face several inherent disadvantages which come in the way of realising better returns. Their share of what the consumer is paying for a commodity, therefore, remains woefully low. Source: Business Standard, Jan 2010

4. Farmers suffer an urgency of selling their produce because of a dire need of funds. Despite the MSP by the Government at this time, they get paid less. The procurement agencies also suffer losses in the process of encouraging the MSP. A lose-lose situation for all : Government, agencies and farmers.

5. Prices rise, inevitably, before the period of new cropping. Counter measures = import + price subsidy Investment in creating infrastructure is critical “In India, about 70% of the population is engaged in agriculture. Our food security must be built on home-grown food, and import is not the answer since production cost in developed countries is rising. If we invest in rural infrastructure and post-harvest technology, and look at production techniques and ways to cope with climate changes, we will be in a position to feed ourselves and others as well.” M.S. Swaminathan, architect of the Green Revolution. agriculture scientist and member of the RajyaSabha

6. The complete cycle Period of new cropping Farmer sells cheap MSP from the Government. Losses for the procurement agencies Accompanying price rise Counter with Import/Sales subsidy Loss of Government money

7. A new business approach

8. Two pronged strategy Farmer support • Provide farmers the facility of pledging crops to Nafed instead of selling • Basis actual need gap study, implement priority allocation of resources towards creating storage facilties • Reduce intermediaries in the cycle of ‘field to table’, thus ensuring just pricing • Standardisation of quality benchmarks to reward superior produce and ensure transparency Institutional support • Nafed to provide loans to farmers • Apply Nafed benchmarks in grading produce and publishing the same • Involvement in futures trading to counter losses • Offer futures traded pricing to farmers (adjusting for related charges) Infrastructural • Priority investment in creating significant inventory of storage capacities • Investment in state-of-the-art storage facilities

9. Brief of NCDC schemes for construction of godowns and cold storages • Gramin Bhandaran Yojna • Pattern of Assistance * Loan for a period of 8 years @ 10% • In case of cooperatives in North East & Hilly Areas and SC/ST Cooperatives, following pattern will apply

10. Brief of NCDC schemes for construction of godowns and cold storagesA. Gramin Bhandaran Yojna (contd) • Godowns constructed outside Municipal Corporation limit will be eligible for subsidy • Normative cost for the purpose of subsidy is as follows • Repair/Renovation of godowns Normative cost as appraised by NCDC or actual cost or Rs. 625/- per tonne of storage capacity, whichever is lower. Pattern of assistance as above

11. Brief of NCDC schemes for construction of godowns and cold storagesA. Gramin Bhandaran Yojna (contd) • Security • 1.5 times NCDC assistance • Land for the godown may be mortgaged to NCDC • In case of leasehold land, remaining period of lease should not be less than 30 years.

12. Brief of NCDC schemes for construction of godowns and cold storages/contd • Central Sector scheme for under developed/ least developed states * Cooperatively Under-developed States Andhra Pradesh, Chhattisgarh, Goa, Himachal Pradesh, Madhya Pradesh, Orissa, Rajasthan, Uttar Pradesh, Uttarakhand, West Bengal, Union Territories of A&N Islands, Lakshadweep * Cooperatively Least-developed States Arunachal Pradesh, Assam, Bihar, Jharkhand, Jammu & Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura

13. Brief of NCDC schemes for construction of godowns and cold storages/contd • Cold Storage * being revised from 25% to 40% Subsidy is restricted to Rs. 6,000/- per MT. it is back ended subsidy i.e., it will be provided as interest free loan which will be converted into subsidy after repayment of loan.

14. Details of land, constructed area, etc. of the Cold Storages / Godowns / Warehouses of the Federation

15. Details of land, constructed area, etc. of the Cold Storages / Godowns / Warehouses of the Federation

16. Details of land, constructed area, etc. of the Cold Storages / Godowns / Warehouses of the Federation

17. Details of land, constructed area, etc. of the Cold Storages / Godowns / Warehouses of the Federation

18. Details of land, constructed area, etc. of the Cold Storages / Godowns / Warehouses of the Federation

19. Details of land, constructed area, etc. of the Cold Storages / Godowns / Warehouses of the Federation

20. Business sense to infrastructure

21. Warehouse constructed • Total area in square meters 48907 • Total area in MTS 66700 • Revenue @ Rs. 100/- per MTS per month 66, 70, 000 • Annual revenue 8,00,40,000 (A) • Value of stocks that can be stored 2,66,80,80,000 • @ Rs. 40,000/- pmt 266 crores • Revenue for pledging @ 4% 10, 64,00,000 (B) At present level . A + B = 18,64,40,000 (C)

22. Total Area available = 3,43,207.80 sq. meters • Constructed on = 48907.09 sq.meters • Constructed area (% of total area) = 14.25% • Without buying land and using 50% of land area = 343207 /2 = 1,71,603 • Less existing utilisation = 1,22,696 (171603-48907.09) • Total Land area available for expansion of storage = 1,22,696

23. Total Land area available for expansion of storage = 1,22,696 • (MTS Storage = Area x 1.5)MTS that can be added = 1,84,044 • Potential revenue = Rs. 51,53,23,200/- (@ Rs. 2800 *pmt) or 51.53 crores • Add existing = 18.65 crores • TOTAL revenue = 70.18 crores * (C)186440000/66700 = 2795 or 2800

24. Capital cost needed • 184044 x 2200 pmt = 40,48,96,800 or 40.50 crores • 66700 x 625 = 4.16 crores • Total cost outlay = Rs. 44.66 crores • Loan = 22.33 crores • Subsidy = 11.16 crores • Own contribution = 11.17 crores

25. Underlying assumptions • Land use can be extended to 50% of the total available land • 1.5 MTS can be stored in 1 square metre constructed area • The situation of Most Investment by Nafed has been considered. • Exemption for North-east and hilly area, SC-ST-Cooperatives has not been accounted for • Cold storage facilities have not been taken into account even though cold storage is more remunerative • Need for Cold Storage can also be analysed and arrived at but need to take into consideration all the Due Diligence reports • Availability of around Rs. 300 crores for pledge financing • Already existing tie-ups with NCDEX. NSEL and MCX etc would be used up for the successful implementation of the project

26. Thank you RajanDhawan Adviser (Commerce & International Trade) nafedrajan@gmail.com