Agri-warehousing needs attention

Discussions on infrastructure tend to be centred largely round energy, transportation, and water. However, the “National Logistics Policy”, launched in 2022, has succeeded in putting the spotlight on the neglected area of warehousing infrastructure. While industrial- and commercial-warehouse developers are taking rapid strides to upgrade facilities, it is “agriculture warehousing” that is crying out for attention.
 

According to a report by Invest India, the Indian warehousing market is expected to see a robust annual growth rate of 15.64 per cent from 2022 onwards. However, this promising growth of the warehousing sector is driven largely by industrial and commercial warehouses, contrasting sharply with the silent crisis unfolding in the agricultural heartland. The absence of modern warehousing infrastructure, and associated advantages, is bleeding the agricultural economy with staggering post-harvest losses and lost opportunities.
 

For a country in which agriculture is the lifeblood of the rural population and sustains half of it, the implications are serious. According to India Infrastructure Research, the agricultural warehousing capacity needs to grow from 145 million tonnes in June 2023 to 223 million tonnes by 2026-27. Focusing on agri-warehousing in India is crucial due to the significant post-harvest losses the agricultural sector experiences. A government-supported study conducted in 2022 revealed India incurred losses of 5-13 per cent in fruit and vegetables, and 3-7 per cent in other crops such as oilseeds and spices, between harvesting and consumption. These losses translate into an annual economic impact exceeding Rs 1.52 trillion.
 

Moreover, India’s value-added agricultural produce is significantly hampered by a lack of cold-chain storage and transportation facilities, leading to widespread spoilage of high-value-added produce throughout the supply chain. This is despite a cold-storage capacity of 37-39 million tonnes.
 

The uneven geographical distribution of agri warehouses further compounds the problem, with states like Uttar Pradesh, West Bengal, Gujarat, Punjab, and Andhra Pradesh housing the majority, while Bihar and Madhya Pradesh suffer from severe shortages. Additionally, most existing facilities are limited to storing a single commodity (such as grain and potatoes), highlighting the urgent need to develop multi-storage capabilities nationwide.
 

The Warehousing Development and Regulatory Authority (WDRA) must now play an active role. Established under the Warehousing (Development and Regulation) Act, 2007, it is expected to foster the orderly development of warehouses, regulate warehouse operations, and promote warehouse receipts as a negotiable instrument. It was constituted on October 26, 2010, as a statutory authority under the Department of Food and Public Distribution, Government of India.
 

The WDRA needs to galvanise activities in this sector by actively promoting forward-thinking strategies. Rationalising the WDRA’s registration criteria based on ground realities through wider stakeholder consultation can be beneficial. Registered warehouses with the WDRA are in single digits. Decentralising responsibilities and allowing states to play a greater regulatory role while the WDRA acts as an overarching body can improve capacity addition, modernisation, monitoring, and governance. Developing a digital portal to provide real-time information on warehouse availability, capacity utilisation, commodity rates, and integration status with e-NAM (electronic-National Agriculture Market, a pan-Indian electronic trading platform for agricultural commodities) will further streamline opportunities. The integration with e-NAM is particularly important because it can facilitate transparent price discovery and provide farmers with better access to markets beyond their local areas.
 

It is also crucial to enhance the role of electronic Negotiable Warehouse Receipts (e-NWRs). e-NWRs are digital documents issued by warehouses registered with the WDRA, replacing traditional paper receipts. They aim to streamline agricultural commodity storage and trading by improving credit availability, enabling sales without moving goods, and increasing transparency in storage. Despite their potential to integrate with trading platforms and improve regulatory oversight, e-NWR adoption has been slow. Enhancing their credibility through rigorous warehouse ratings and building confidence among lenders is crucial to unlock financial benefits for farmers and improve market efficiencies.
 

Prime Minister Narendra Modi’s unveiling of the world’s largest grain storage initiative within the cooperative sector in March 2024 marks a pivotal step in this direction. This ambitious project aims to create storage facilities for 70 million metric tonnes of grain over the next five years, backed by a substantial investment of Rs 1.25 trillion. The pilot phase of the project has been launched, and the foundation has been laid for 500 primary agricultural credit societies (PACS) to construct godowns and other essential components of agricultural infrastructure.
 

However, the movement for modern agri-warehousing has to go beyond the state and cooperative sector.
 

The government has taken initiatives to strengthen agricultural warehousing infrastructure nationwide. Central to these efforts is the Pradhan Mantri Krishi SAMPADA Yojana (Scheme for Agro-Marine Processing and Development of Agro-Processing Clusters), extended until 2026 with a Rs 46 billion budget, focusing on mega food parks and integrated cold chains to bolster storage capacities and reduce post-harvest losses. Complementing this, the Private Entrepreneurs Guarantee Scheme supports partnerships with Food Corporation of India and state agencies for expanding storage facilities. Initiatives like the Integrated Cold Chain Scheme are expected to enhance cold-storage infrastructure, while the development of modern steel silos under national policies should lead to augmentation of grain storage capabilities.
 

Policy interventions promoting modern warehousing technologies like hermetic storage and mechanised loading/unloading systems, coupled with financial incentives such as interest-subvention schemes and viability-gap funding through programmes like the Warehouse Infrastructure Fund of the National Bank for Agricultural and Rural Development, should be able to catalyse private investment. Establishing quality assaying, grading, and testing facilities at the district or cluster level can also be linked to warehousing operations.
 

As India aims to become a $5 trillion economy, fixing inadequate links like agri-warehousing infrastructure is a clear priority. By addressing these challenges and implementing forward-thinking strategies, the WDRA can ensure that India’s agricultural backbone remains robust and resilient.
 

India’s growth story remains incomplete without a modern, trustworthy, and efficient agri-warehousing ecosystem backed by an assertive and supportive regulatory environment.

The writer is an infrastructure expert, and the founder and managing trustee of The Infravision Foundation (research inputs from Vrinda Singh)