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J N Port plans agri processing and storage facility to boost exports.
Jan 11, 2024
State-owned Jawaharlal Nehru Port Authority (JNPA) plans to build an export oriented agricultural produce processing and storage facility with private funds at Sheva, Raigad in Maharashtra as it aims to enhance the shelf life and quality of export agricultural produce and increase the quantum of India's agricultural exports.
The facility seeks to extend the shelf life of agricultural produce and satisfy the sanitary and phytosanitary criteria set by destination nations and help minimize losses resulting from rejection by importing countries.
The facility will be crucial in helping India create the procedures, quality criteria, and packaging requirements necessary to satisfy the highest international standards for agricultural products.
'This is a first of its kind facility in an Indian port and is also JNPA’s business with social commitment, especially to our farmers,' Unmesh Wagh, Chairman in Charge and Deputy Chairman of J N Port Authority and the driving force behind the project, told ET Infra.
'It is a win-win situation because they can aggregate the produce at one place which is a state-of-the-art facility, then either export or use the port’s coastal berth to distribute all over India,' Wagh said.
'In this way, our agricultural produce waste will be reduced and income will be enhanced. It can act as a model for other ports to follow,' Wagh added.
The export oriented agricultural produce processing and storage facility, estimated to cost Rs284.19 crores, is planned on a 27-acre land parcel accessible via the Funde - Nhava Sheva Road.
The project will be awarded to a private firm for a concessionaire period of 30 years, including construction period of 1.5 years. It will be designed to handle 0.8 million metric tonnes (MMT) to 1.2 MMT of agricultural cargo over 30 years.
India ranks second in global agriculture production, but its share in global agricultural exports is only 2.4 percent, placing it eighth in the world (WTO’s Trade Statistical Review, 2022). In terms of domestic contributions, agricultural exports make up less than 2 percent of India's GDP, which is lower compared to other developing agrarian countries.
For instance, Brazil and Indonesia rank third and sixth, respectively, in global agricultural exports and contribute around 5 percent and 4.4 percent to their GDP’s. Argentina, another leading exporter, saw agricultural exports contribute to nearly 7 percent of its GDP in 2022, according to the World Bank.
Maharashtra accounts for about 16.58 percent of India's agricultural exports and is the top earner per ton of exported goods despite being the second-largest exporter after Gujarat.
While J N Port’s status as the country’s biggest state-owned container gateway and the second largest overall is well known, what is not well known is that the port located near Mumbai holds the pole position on handling agricultural cargo.
Currently, the annual flow of agricultural goods through J N Port is 5 million tonnes (MT) and is projected to increase by 3 percent compounded annual growth rate till 2028. Among the agricultural exports, horticulture, floriculture, and non-grain agricultural products comprise approximately half of this cargo.
In 2023, India exported 44 MMT and imported 25 MMT of agriculture products.
J N Port played a substantial role in agriculture product shipments, handling 7.3 MMT of exports and 3.1 MMT of imports.
The proposed agri facility seeks to elevate agricultural exports by offering storage, preservation, and quality control. The project will empower farmers and exporters, catalyse demand, and nurture rural growth. The benefits span higher product prices, increased employment, and a boost to the agricultural sector.
Despite several initiatives taken by the government to promote agricultural exports, India continues to face challenges in improving its share in the global agricultural market and diversifying its exports with higher value-added products.
By 2035, the Agriculture Export Policy finalised by the Ministry of Commerce and Industry, aims to increase agricultural exports to approximately $100 billion. To facilitate this expansion, the policy highlights the urgent need for the development of high-quality infrastructure at seaports and airports, which serve as the main exit points for imports and exports.
'It is anticipated that this facility will play a crucial role in adding value to agricultural products through the provision of storage, preservation, and quality control services. Additionally, it is expected to create significant employment opportunities. By offering adequate storage and preservation capabilities, the facility will enable farmers and exporters to maintain high quality and freshness of agricultural products, thus increasing their market appeal. Ultimately, the establishment of this facility at JNPA is poised to strengthen the agricultural export sector, fostering economic growth and development,' CRISIL Market Intelligence & Analytics (a unit of CRISIL Ltd) - Global AgriSystem Pvt Ltd (GAPL) wrote in the techno-economic feasibility study and detailed project report.
The laboratory is projected to lead to an increase in exports from the region, particularly among small traders. The affordable testing charges offered by the laboratory are expected to incentivize small traders to have their consignments tested, enabling them to comply with quality parameters and subsequently engage in exports.
Inefficient processing and multiple handling are considered as primary contributors to losses in both export and import of agricultural products.
The proposed facility aims to enhance processing efficiency, reduce multiple handling, and address infrastructure deficiencies, thereby curbing avoidable wastage in export and import.
'Once the produce is packed at the facility, it will go to the terminal just before the vessel arrives, enabling huge cost savings,' Wagh said.
The facility, according to Wagh, can also act as an extension of a big warehouse in Jebel Ali or a big value chain in Europe, store at a lesser cost and parcel as per requirement.
The proposed facility is projected to handle 8.5 lakh metric tons in the base year, with an estimated reduction of 5.6 percent in quantity, equivalent to 47,752 metric tons, and a 4.9 percent reduction in value, amounting to Rs 359 crores. These projections underscore the facility's potential to significantly enhance operational efficiency and yield substantial cost savings within the supply chain.
Implementation of the proposed facility is anticipated to reduce total losses by some 70 percent, resulting in a reduction of 33,309 metric tons (70 percent of 47,752 MT) and a 74 percent decrease in value, equivalent to Rs204 crores (74 percent of Rs359 crores) in the first year of operations. This underlines the substantial efficacy of the facility in mitigating losses and optimizing financial outcomes.
The project will help J N Port monetize land and attract additional cargo movement through the port by offering facilities for shelf-life enhancement, encompassing cargo and container storage and handling, customs clearance, bulk agricultural cargo handling and storage, transshipment/cross-loading, cold storage services, reefer handling, and monitoring, as well as laboratory testing for compliance and quality assurance.
The private developer will have to pay royalty to J N Port Authority comprising a fixed component for the land parcel supplemented by a premium per sq meter for the entire 30-year concession with annual escalation of 2 percent. This will safeguard J N Port Authority’s financial interests and is not sensitive to trade volume.
The private operator will not be required to pay royalty to the port authority for the initial three years of the project, which includes 1.5 years of construction phase.
The operator of the facility will have the freedom to set market-driven rates, fostering flexibility and competitiveness.
infra.economictimes.indiatimes.com
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