SEZ row, tardy show may farm out AEZsArticle

PRABHA JAGANNATHAN

TIMES NEWS NETWORK[ SATURDAY, FEBRUARY 03, 2007 02:39:14 AM]

NEW DELHI: The development of agri export zones (AEZ) — posited a decade
ago as an out-of-the-box idea by the Centre for faster development of
agricultural exports in resource-rich but infrastructurally backward
regions — may turn out to be a casualty of the SEZ row.

There may be no special incentives in Budget 2007 for AEZs, which appear
to have become as touchy an issue as SEZs, but for an entirely different
reason: failure. Acknowledging that anti-SEZ developments may have an
unexpected fallout, government sources said, “AEZs are also likely to be
a hands-off area in the Budget.”

Despite the grandiose announcement in Budget 2001 for the development of
AEZs (this was followed in 2002 by RBI announcing a refinance scheme for
farmers pursuing contract farming in AEZs), AEZs have been in the
doldrums subsequently. Even the food processing ministry’s own review of
the performance of sanctioned projects in 25 AEZs found very few were
doing well, and those that were progressing at all did so only
marginally. In short, they neither attracted investment nor aided in
boosting export of agricultural produce and processed food products, as
envisaged by the government.

The government has sanctioned 60 such projects since 2001-02, which
would have involved an investment of Rs 1,800 crore.

The projects were to result in exports of over Rs 11,000 crore. However,
the parent ministry’s own reality check showed that AEZs underperformed
to the extent of a whopping 50%. By mid-2005, they only brought in an
investment of Rs 449.90 crore and exports of Rs 2,815.66 crore. A
subsequent check revealed they only lured a paltry investment of Rs
811.18 crore and boosted exports by Rs 5,316.31 crore. By December 2006,
it was reported that the fate of 37 projects under eight AEZs (involving
an investment of around Rs 500 crore) may hang in balance, thanks to the
lack of approval by the government, despite all formalities having been
fulfilled by the parent body, Apeda.

The formation of AEZs in select areas of different states was mooted in
Budget 2001. This was later incorporated in the Exim policy. Apeda’s
concept of Agri Export Zones sought to improve the levels of food
processing and reduce waste percentage (a high 40% and more), increase
marketability and help farmers enjoy higher realisation. The concept was
centred on the cluster approach of identifying the potential products,
the geographical region in which these products were grown and adopting
an end-to-end approach of integrating the entire process right from the
stage of production till it reached the market.

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