After putting in place a framework to develop space for additional grain storage of about 15 million tonnes, the food ministry, along with the Planning Commission, is now working on creating modern silos (a cylindrical structure used to store grains) of 2 million tonnes of capacity.
Officials said the Planning Commission has prepared a blueprint of the proposal which favours a big role for the private companies in the construction of silos to be located in the grain consuming states. The proposal said the silos would be constructed by private parties. For this, the government would provide a viability gap funding (VGF) up to 20 per cent of the capital cost of silo.
VGF beyond 20 per cent would be provided by the Food Corporation of India. This could be provided to the corporation from Plan resources. FCI would store the grains in a covered area plinth. This would be done in producing areas. The grains would then be transported to silos located in the consuming states. Southern Indian states are the major consumers of wheat (thus transported), the rice so moved out is sold in a big way in the western, northern and north-east Indian states.
The Planning Commission’s proposal also favours granting the private parties different concessions for a period of 20 years, which can be extended by another 10 years.
Experts believe the focus should be more on allowing more private participation in grains trade — and not just on the construction of storages and warehouses to solve the problem of massive post-harvest losses.
“The question is not who builds the silos. What matters is who stores in them and uses them,” says Gokul Pattanaik, chairman of Global Agri Systems. “This is because if the government is the sole user of these silos, then it won’t hold much attraction for private companies. For, the stock rotation in such silos would be more than 4-5 years, making the venture unviable for private companies,” adds Pattanaik, also an expert on agriculture business.
On the charges to be paid for storing in such silos, the proposal says that there will be a component of fixed-capacity charges and variable service charge. Almost three-fourth of the fixed capacity charge will be indexed against the variation in wholesale-price index. It will be 100 per cent indexed in the case of variable charges which will enable the promoter to get a inflation-indexed price, it notes.
“The storage cost in such modern silos will be almost 12-15 per cent more than conventional storage,” adds the proposal. The land for such silos will have to provided by the state government on nominal lease rent.