‘Common interest space’ of PPP model can take consumer rupee closer to the farmer

The Public Private Partnership (PPP) provides a sustainable solution to poor linkages in marketing channels with poor marketing infrastructure, which […]


The Public Private Partnership (PPP) provides a sustainable solution to poor linkages in marketing channels with poor marketing infrastructure, which lead to small share of consumer’s rupee reaching the farmers and higher fluctuations in consumer prices. PPP broadly refers to long-term, contractual partnerships between public and private sector agencies, especially targeted towards financing, designing, implementing and operating infrastructural facilities. Each partner, through legal binding contract agrees to share responsibilities, risk, reward and resources. PPP helps reduce considerable wastage and deterioration in quality of farm produce. It combines the best features of public and private sectors together, making a win-win situation for both the partners. The private sector leverages its advantages in financing, greater operational efficiency, better marketing practices, lower costs, efficient delivery systems, faster decision making, management flexibility, quality service and better up-scaling technologies. The public sector can leverage upon administrative base, public support, certifications, market base, extensive infrastructure, institutions of higher learning that can generate knowledge through basic research and vast pool of both teachers and trained human resource. The public sector has also the capacity of solving all problems that do not have immediate rewards in the form of monetary profits. Developmental theorists have proved that PPP generates poor linkages in marketing channels and poor marketing infrastructure are leading to small share of the consumer rupee reaching the farmers and higher fluctuations in consumer prices, larger social benefits by creating symbiotic relationship between the partners. There are many successful models based on experience of developed countries for the benefit of farmers and society at the large. These include build-operate-transfer (BOT) model, build-operate-own model, joint ventures, leasing, operational management contracts and concessions. Some of the biggest corporate houses in the country have joined hands with the government to develop agricultural marketing infrastructure, like food parks, terminal markets, state-of-the-art mandis, etc. One such model is that of Mahindra Shubhlabh Services Limited which has an agreement with the Government of Punjab to facilitate contract farming of maize in one lakh acres for diversification for supply to Indonesia through Punjab Agro Foodgrains Corporation. The Rajasthan government has also created various multi-chamber cold storage facilities, mobile soil-testing labs, static soil-testing labs, warehouses and market roads through PPP mode. Two focus areas for PPP in agricultural marketing are farm-to-market roads and trading centres. The farm-to-market roads are crucial in linking various elements of agricultural value chain, like input suppliers, farmers, village traders, wholesalers, processors, etc. good connectivity encourages farmers to directly sell their produce in bigger markets, rather than depending on village traders. Thus, roads definitely help in reducing intermediaries. Since horticultural produce are highly perishable in nature, they need to be quickly transported to reduce losses. With better road connectivity, flow of information among farmers, extension workers, traders, buyers and suppliers also gets enhanced. In India, BOT model of PPP is most successful for roads. Projects like widening of existing roads, maintenance and new constructions are taken up to link farms to markets. The APMC Model Act-2003 has permitted participation of private sectors in developing infrastructures for wholesale market and trading centres. Financial assistance in the form of subsidy is also given to private companies and corporate houses involved in creating such infrastructures. The National Horticulture Mission (NHM) has initiated modern terminal markets. It is implemented in the PPP mode, with a main market (called the Hub) and multiple collection centres (called Spokes). Terminal market complexes (TMC) are approved in Patna, Perundurai and Chennai under the NHM. The TMC projects of Madurai, Nagpur, Babangaon and Sambalpur have been approved in principle. It is important to understand partnerships not as a static arrangement but as a process that moves gradually from general ideas about “profiting one from another” to concrete arrangements with defined objectives. In their book Public-private Partnerships for Agroindustrial Research, Frank Hartwich, Willem Janssen and Jaime Tola suggest that there are five steps to consider: identification of the common interest space; negotiation and design of the partnership contract, including legal, funding, and governance issues; implementation; evaluation of achievement; and, deciding whether the partnership will continue if the objectives are not yet achieved, or if there are new and promising objectives to pursue in the partnership arrangement. Over time, partnership can profit from gradually improving work relationships and become strategic. Otherwise, since partnerships are flexible arrangements that are a means to an end, they may simply be phased out according to a report in the Indian Farming. There are certain key features of public and private sectors that determine the extent of their likely involvement in any endeavour. The private sector is profit oriented, which is crucial for its survival and a part of their earning is paid to the government in the form of taxes. The public sector on the other hand has social responsibilities and must invest in all kinds of infrastructure to support overall development for the benefit of all the citizens to ensure peace and prosperity of the society in a holistic sense. Many of the public sector activities may not be profitable in short-term, but are essential for long term stability of the country. Partnerships are established by means of a verbal or written agreement among the partners, which is subject to the country’s contract law. A partnership contract, establishes the basic rules for the PPP. To help ensure a successful partnership, it is essential that the contract should be very clear and that it provides for continuity and security to safeguard the interests of all partners. Negotiation with respect to sharing of responsibilities, risk, reward and resources is also very critical for both the partners. Sometimes misperceptions between public and private sectors with regard to intentions, goals and credibility of achievements may ruin the project. As in PPP workforce from diverse background come together, creation of new roles, processes and reporting relationships among its partners has to be predefined. Cross cultural training is essential in case of international private companies. Moreover high investment risk and lack of assured returns are inherent problems related to our agricultural sector. Thus, it would be appropriate that partnership requires patience, transparency and trust to succeed. All partnership efforts for agricultural transformation should ultimately lead to economic prosperity of the farmer. PPP will become more meaningful if strategic relationship between partnership is made sustainable with respect to clear deliverables, results and targets agreed upon. There is a dire need to have such collaborations to improve the existing state of agricultural marketing. (PTI)

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