The Government policy to involve private firms in foodgrain procurement in Eastern States - mooted by the Food Corporation of India (FCI) and then approved by the Ministry of Food Supplies and Consumer Welfare - has failed to trigger interest among private players due to pricing factors, while the corporation claims different reasons for the failure. It is learnt that FCI is mulling different pricing to recall the same tender again for the fourth time.
As far as Eastern States are concerned, the FCI floated tenders for two clusters, especially in Assam, around three months ago, but there was no response from private companies for the tenders. Instead of learning from its failure, the FCI recalled the same tender thrice with the same terms and conditions but no private players showed interest in such tenders. However, sources said that FCI is planning to recall the same tender again for the fourth time with different pricing.
In fact, one of the key recommendations in the Shanta Kumar report was that the basic objective was to maximise the number of participants so that farmers end up getting most-competitive prices. However, certain terms and conditions in the policy have scuttled its smooth implementation. Sources, however, said, besides Assam, the response was also tepid in Jharkhand, UP and West Bengal where FCI had to float tenders three to four times each.
“Though the tender in some of these states was finalised after three-four rounds of tender, there was hardly any competition in sight. There are only three parties who participated in all tenders across these states. And the end result was poor competition and heavy loss to farmers,” added sources.
When contacted to the FCI headquarters, KK Paliwal, General Manager (Procurement), however, has refuted the claims that the corporation has got very good responses in UP, West Bengal and Jharkhand. “Private players participated in all these states. Only in the case of Assam, we encountered some typical problems as it is a hilly state. We are planning to ease some of these norms for Assam,” Paliwal confirmed.
To a question that if the response was good what was the need for calling repeated tenders, Poliwal said the corporation did it to discover better prices. But experts in warehousing and procurement are of view that conditions like a minimum turnover of 200 crore and a profit of at least 2 crore during last three years as criteria for private players have foreclosed the options of many mid-level private players with expertise in warehousing and procurement. "Allowing select deep-pocket players in a sector as sensitive as minimum support price (MSP) procurement will kill competitiveness, and encourage monopoly by a select group of players," they added.
According to the sources, FCI's Kolkata regional office has written to its headquarters to revisit the norms so that more players will take interest in the tender, but the ministry has reportedly declined to change the parameters. In case of Jharkhand, a tender was also floated for a single cluster and the Mumbai-based foodgrain procurement firm NCMSl bagged it as not many players showed interest in the bid.
In Uttar Pradesh, four clusters were on the block and bids were called separately for each cluster. The tender was rejected in the first time while it evoked little response in the second time. Only one cluster was finalised in the third time.
Similarly in Assam, the State Government has sent a proposal to the Central Government to ease the policy norms, considering that most of the procurement areas in the state are in hilly terrains and there may not be much participation unless the rules are eased.