Apart from the current focus on new capacity creation, upgradation of existing infrastructure and integration of information technology should also be considered important to make systems more agile and proficient, says Anil Choudhary, managing director of the National Bulk Handling Corporation (NBHC) in an interview with Dilip Kumar Jha. Edited excerpts:
How do you see the prevailing warehousing climate in the country?
The government is mulling space for storing 61-63 million tonnes (mt), while various other reliable sources estimate it at 70-75 mt. For the past several years, the government has been procuring 55-58 mt of foodgrain. So, additional grain procurement under the Food Security Bill should not be a problem.
Around 50 per cent of the surplus, which currently comes to the market, will be taken away to meet additional grain requirements under the proposed Bill. We are addressing that issue. Considering the existing ready storage capacity of 58 million tonnes, in addition to the eight million tonnes to be constructed in about 18 months under the Private Entrepreneurs Guarantee (PEG, popularly known as the 10-year guarantee) Scheme, by the Food Corporation of India (FCI), there still will be a huge deficit of storage space in the country. The 11th five-year plan itself projected a deficit of 35 mt. If adequate steps are not taken, the deficit would widen to 50-60 mt by the end of the 12th five-year plan, going by the growth in agri production. While eight mt of storage capacity building has been finalised, processes are on for another 15 mt of warehouses and two mt for silos. Still, we are far away from the optimal warehousing infrastructure that the critical part of the economy needs.
Is there any deviation in location?
Most of these storage capacities are created in producing states. Under the Food Security Act, the government has proposed a minimum storage equivalent to four months of consumption at the district and taluka levels. Hence, there is an immense requirement of warehousing facilities near consumer centres, which are yet to be focused. Apparently, a bigger part of the existing warehousing capacity is very old construction. They may not be good to sustain the quality and quantity of foodgrain due to frequent change in climatic conditions. Hence, these old warehouses need to be upgraded into modern ones. Also, a large part of the warehousing infrastructure under the various verticals of the government is used for non-agri purposes as well.
How about wastages due to post-harvest mismanagement?
The wastages seen in the last few years due to bumper crop and abundance of government procurement could have been reduced substantially, had the country created adequate storage facilities. Most of the time, managing infrastructure, including warehouses, which means managing quality, quantity and taking good care of commodities throughout the storage period, also become important.
Is private participation in government tenders adequate?
In the government’s tender process, we have not seen large-scale participation by large private players, who can bring in much better management practices and competent economy of scale in warehousing. There are a lot of apprehensions. For instance, if the government does not need to procure the quantity offered by farmers, what would happen? Will the PEG continue or would these warehouses be relieved before the guarantee period of 10 years? The government still needs to do quite a bit not only about the foodgrain it procures, but also for the entire spectrum of agriculture production, including foodgrain for private trade and non-foodgrain agri commodities.
Will infrastructure status help the overall warehousing sector?
Yes, granting infrastructure status to cold chains and post-harvest storages will bring some semblance of commercial viability, thus spurring private sector investment. Agri warehousing is characterised by low margins and resultant low viability. The granting of infrastructure status, along with the proposal of viability gap funding, are expected to make a significant dent.
Any other issue ?
Availability of low-cost and long-duration funds is critical for this sector. The government, therefore, should also think of granting direct agri credit status to warehouse construction loans from commercial banks. This would bring down the debt cost significantly, thus improving the viability of the investments.