A commodities trader in the eastern part of the country is wondering how he could use some land owned by him to construct warehouses. After all, the government is offering a 10-year guarantee to use the space to store the abundant stock of foodgrains. In addition, there are other sops on offer.
However, in Delhi, at the Food Corporation of India headquarters, there are few signs of any rush to step up storage capacity across the country, despite Agriculture and Food Minister Sharad Pawar recently saying that 2010-11 could end up as the best year for India in terms of crop output.
This is despite the fact that silos are overflowing. Against a storage capacity of 56.9 million tonnes (mt), including in hired and owned open spaces and plinths, the government already has a stock of 57.9 mt of wheat, rice and coarse grains.(Click for graph & table)
The agriculture ministry’s initial estimates suggest the rice output in 2010-11 would be around 80.41 mt, six per cent more than last year. Even if the government procures 20 per cent of the produce, the problem is set to intensify. During the 2010-11 rabi season, government agencies had procured 22.5 mt of wheat, around 87 per cent of the total arrival in the mandis.
“The storage capacity we have is in tandem with the buffer stock norms fixed by the government. The big question is why are we keeping such huge stocks of foodgrains? The government has turned into the biggest hoarder of foodgrains in the country and is not assisting food security and is driving the prices up in the open market,” said Ashok Gulati, director (Asia) of International Food Policy Research Institute.
While there are various options available with the government — from selling in the open market at low rates to exports and increasing the stock limit for private players — Pawar and his men are yet to finalise their plan.
Various officials that Business Standard spoke to said there was no way the silos and the open plinths could accommodate more grains. But there is little that they have done to expand capacity.
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Between March 2007 and March 2010, the overall storage capacity, which includes owned and hired facilities of three government agencies, has increased by around 10 per cent. A major chunk of this increase is due to hiring, as the government agencies have failed to create their own capacities.
Of the three state agencies involved in building large-scale storage and warehousing capacity, the Food Corporation of India’s (FCI’s) facilities are foodgrains, while those available with the Central Warehousing Corporation (CWC) and the 17 State Warehousing Corporations are used for the storage of foodgrains and other notified commodities.
Since 2007-08, the three public sector agencies have constructed new capacities of 770,000 tonnes, with CWC planning to add another 200,000 tonnes during the current financial year. FCI is currently not constructing any new storage capacity, though it has in place a 10-year guarantee scheme aimed at creating capacities through the public-private partnership mode.
Though FCI’s High-Level Committee recently approved the creation of 14.9 mt capacity in different states, the bidding process has just started.
Unlike the trader from the East, most private players are not enthused about the scheme. They say the rules are stringent and might not be profitable. FCI officials, however, said the scheme had already been reworked and they would wait for a while before they reviewed it. Besides, they said the initial response was poor, as the bulk of the capacity was proposed to be added in Punjab and Haryana, where real estate prices are comparatively higher. Under the revised plan, more capacity is proposed to be added in consuming states such as Rajasthan, Gujarat and Andhra Pradesh.
But officials themselves admit it will take at least two or three years for this capacity addition programme to bear any results.
Till then, no one knows where the additional stock will the stored.