MFPS- A Linkage between Farming and Food Processing Industry

Mega Food Parks Scheme

With an aim to establish direct linkages from the farm to processing and to consumer markets, through a network of Collection Centres and Primary Processing Centres, Mega Food Park Scheme was launched in 2008 by the Ministry of Food Processing Industries, Government of India. The key objectives of the scheme are to reduce wastage of perishables, raise processing of food items from 6% to 20% and raise India’s share in Global Food Processing Industry from 1.5% to 3%.

Structure of Mega Food Park:

A mega food park has been divided into three parts: Collection Centres (CCs), Primary Processing Centres (PPCc) and Central Processing Centres (CPCs).

CCsmanaged by the local entrepreneurs who aggregate the produce from individual farmers, farmer groups and Self Help Groups within a radius of around 10 Kms and feed the raw material to the PPCs. It was expected that these CCs will emerge as centres of rural commerce and will encourage economic activities in the area.

PPCs, located near natural aggregation points serve a number of collection centres lying in close proximity. The primary processing centres provide facilities including storage, sorting, grading, cleaning,pulping, juicing and transportation like refrigerated vans, trucks etc for carrying the goods from CCs to the central processing centre.

CPCs will be an industrial park and house for a number of processing units owned by different business houses. The park provides common facilities such as electricity, water and treatment along with specialized facilities like ware housing, logistics,cold storage and backward integration through the network of PPCs and CCs.

Most important Features of Mega Food Parks

• Limited to non-land component of the project and project is done on 50-50-50 scheme {Rs. 50 Crore grant by Government; 50 acre land is needed; 50 crore minimum investment to be done by park developer}
• Typical Project Cost envisaged – Rs 120-150 crore Land – not eligible for funding out of GOI grant Assistance from Ministry
• 50% of project cost limited to Rs. 50 Crore in general areas and 75% of project cost limited to Rs. 50 Crore in difficult & hilly areas and ITDP notified areas.

Eligibility:

Implementation of the Mega Food Park is done through the Special Purpose Vehicle (SPV) mechanism in which Financial Institutions/Banks, organized retailers, processors, service providers, producers, farmer organizations and other related stakeholders are the equity Holders.

Each SPV is a Company registered under the Companies Act; and is required to have at least three entrepreneurs / business units which would be independent of each other with no common directors. The land for the project is arranged by SPV.

• A minimum of 26% of equity of the SPV should be held by food processor(s) within the SPV.
• The combined net worth of the shareholders of the SPV should be minimum 50 Crore with food processor(s) having at least of Rs. 10 Crore of net worth.
• Central government agencies are allowed to become shareholders in the Special Purpose Vehicles (SPVs) to run food parks without any restriction on their equity.
• The SPVs need to bring in at least 20% of the project cost, including the cost of land, as their contribution.

Government Assistance:

The MFPS scheme envisages a onetime capital grant of 50% of the project cost (excluding land cost) subject to a maximum of Rs. 50 Crores in general areas and 75% of the project cost (excluding land cost) subject to a ceiling of Rs. 50 Crores in difficult and hilly areas i.e. North East Region including J&K, Sikkim, Uttarakhand, Himachal Pradesh and ITDP (Institute for Transportation & Development Policy) notified areas of the States.

Role of State Government:

• Providing assistance to SPVs in procurement of suitable land.
• Providing all the requisite clearances for setting up the MFP and its components thereof and providing the necessary assistance for Water, Power, Approach roads and other external infrastructure to the project.
• Considering special facilities like exemption of stamp duty, VAT/Sales Tax exemption etc. for the MFP and the units located in the MFP.
• Providing a fast track single window agency to facilitate clearances and permissions required for the project.