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THE FOOD CORPORATION OF INDIA
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NO.PROC.II/32(4)/2007                                     Dated: 17.12.2007
 

The Genl. Manager, Food Corporation of India, Regional Office, CHANDIGARH/PANCHKULA/LUNCNOW DEHRADUN/JAIPUR/JAMMU/SHIMLA/ NEW DELHI/MUMBAI/AHMEDABAD/ BHOPAL/RAIPUR/HYDERABAD/ CHENNAI/THIRUVANANTHAPURAM/ BANGALORE/KOLKATA/BHUBANESWAR/ PATNA/RANCHI/GUWAHATI.

The Executive Director, Food Corporation of India, Zonal Office, (North/West/East/South/NE) NOIDA/MUMBAI/KOLKATA/ CHENNAI/GUWAHATI

SUB: Policy for involving Central Govt. undertakings/State Govt.
Undertakings/Cooperatives/Private Companies for maximizing
Procurement for the Central Pool & expanding the scope of MSP
operations.

Sir,

The policy guidelines for involving Central Govt. Undertakings/State Govt. Undertakings/Cooperatives/Private Companies for maximizing procurement for the Central Pool & expanding the scope of MSP operations issued by the MOCAF&PD, GOI Vide letter No.167(2)/2007-PY.I dated 30.10.2007 ( copy enclosed) had already been sent to you earlier.

Now it has been decided by the Competent Authority that the Govt. of India’s policy guidelines referred to above may be hoisted in the FCI, Zonal & Regional Website also at the earliest along with following guidelines:-

The Deptt. of Food, GOI has recently formulated aforesaid Policy for involving Central Govt. Undertaking/State Govt. undertakings/for the Central Pool and expanding the scope of MSP operations in the areas where FCI/State agencies infrastructure for potential of procurement is weak and existing Govt. Agencies (FCI and State agencies) are not able to carry out MSP operations in such areas where procurement exists to ensure that farmers are not denied the benefit of MSP.

The eligibility Criteria and priority for engaging such Agencies/Private Companies is mentioned in clause 2 to 2.3 of the policy guidelines.

The Private Companies who fulfills the conditions can only be engaged as a last option as per the policy guideline.

The engagement of agencies falling under clause 2.2 and 2.3 must result in a Cost Saving of at least 10% of the incidentals ( other than taxes, statutory charges etc.) of FCI as provided at point 3.3 of Policy of guidelines of Ministry of Food.

The other details are mentioned in the enclosed policy guideline. The Central Govt. Undertakings/State Govt/Undertaking/Co-operatives/Private Companies fulfilling the eligibility criteria and desirous to undertake paddy procurement operations on behalf of FCI may give in writing their credentials along with ‘No objection’ from the Food Secretary of the concerned State to the concerned GMs(Region)EDs(Zone) or Procurement Division, FCI, Headquarters.

This may also be hoisted on FCI Region/Zone Website.

Please acknowledge receipt.

Enclo:- as above.

Yours faithfully,


( Y.K.KUNJU)
DY.GENL.MANAGER(PROC.)

NO.167(2)/2007-Py.I
Government of India
Ministry of Consumer Affairs Food & Public Distribution
Department of Food & Public Distribution.

Krishi Bhavan, New Delhi
Dated the 30th October, 2007.

To
The Chairman & Managing Director
Food Corporation of India
16-20, Bareakhamba Lane
New Delhi.

Sub:- Policy for involving Central Govt. Undertakings/State Govt. undertakings/
Cooperatives/Private Companies for maximizing procurement for the
Central Pool and expanding the scope of MSP operations.

Sir,

The existing Policy for involvement of Central Govt./State Govt. Undertakings/Cooperatives/private companies in procurement of foodgrains (rice, wheat and coarsegrains) for the Central Pool has been reviewed in this Department and the following policy guidelines are hereby issued in super session of this Ministrys’ letter dated 19.4.2007.

1. As far as possible, FCI and State agencies involved in procurement operations should do the procurement directly.The FCI and State Governments should consider involving other agencies in procurement for Central Pool only in those areas( where their infrastructure for procurement is weak and existing Government agencies (FCI and State agencies) are not able to carry out MSP operations in such areas where potential for procurement exists.)

2. To ensure that farmers are not denied the benefit of MSP due to the constraints of FCI/State agencies, in areas which are in covered, FCI should use the services of “other agencies” as per the following priority.

2.1 In the first instance, the proposals received from Central Government undertakings/State Government undertakings/cooperatives to undertake procurement on behalf of FCI should be considered.

2.2 Incase there are still uncovered areas with potential for procurement, then proposals received from agencies which have at least 51% equity by Central Govt/State Govts/Nationalized banks/Financial institutions should be considered.


2.3 As a last option, agencies which have some investment by banks/financial institutions and have at least one nominee Director on the Board and are service providers can be engaged on a limited basis. However, agencies/firms who are traders in foodgrains shall not be engaged. The issue of using companies for procurement operations which are not included in Paras 2.1 and 2.2 should arise only for those areas where those organizations are not able to reach out to the farmers. This policy guideline does not recommend substituting public sector agencies or cooperative agencies which are already involved in procurement operations in a particular area with joint sector or private agencies in these areas.

3. Engagement of other agencies mentioned in paras 2.2 and 2.3 above should be subject to the following conditions.

3.1 These agencies should be recommended by the concerned State Government and found acceptable by FCI.

3.2 State Governments should undertake to supervise the operations of these agencies and ensure that these agencies pay the Minimum Support Price(MSP) directly to the farmers. In case any complaint of non-payment of MSP is found substantiated in an enquiry by State Government/FCI, the agreement with such companies should be cancelled and suitable penalty should be imposed.

3.3 Engaging such agencies should result in a cost saving of at least 10% of the incidentals (other than taxes, statutory charges etc) of FCI.

4. FCI should evolve a Model/MOU with appropriate procedure including stringent penalty clauses, including fines, for violation of any terms of agreement.

5. It should be kept in view that responsibility for carrying out procurement of adequate quantities of foodgrains for the Central Pool will continue to lie with the FCI and respective Government agencies already involved in the same, and engagement of other agencies (firms/companies/cooperatives, etc.) for procurement should result in increased procurement in the State as a whole and should not become a reason for non-performance of FCI and State Government agencies already vested with this responsibility. These agencies should not perform in a pick and choose manner, but should form part of an overall strategy of FCI formulated before each procurement season to widen the scope of MSP operations in order to bring benefits to more number of farmers and to increase procurement for the Central Pool.

6. The amount of foodgrains procured through other Agencies shall be reported as part of the daily report on foodgrains procurement sent to this Department by the FCI. The FCI shall also send a report on the performance of other agencies after the completion of the procurement cycles(in April,2008 for Kharif procurement operations of KMS 2007-08, in August, 2008 for wheat procurement in RMS 2008-09 and in October 2008 for Rabi paddy procurement of KMS 2007-08). Suggestions for strengthening the procurement process may also be sent by State Governments to FCI on a quarterly basis. FCI shall examine such suggestions & submit quarterly reports to Government by10th of April, July, October and January to enable this Department to review this policy.

Yours faithfully


(Ashesh Agrawal )
Director(Policy)
Tele No.23385238

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