 "Storage infrastructure fails AP, Telangana farmers")
The shortage of storage and cold chains is hitting Andhra Pradesh and Telangana farmers hard.
The Andhra Pradesh Cold Storage Federation puts the post-harvest losses for paddy in the range of 25% to 30% due to lack of storage.
“In a country like India, that is an unpardonable crime,” points out YGK Murthy, joint secretary of the federation.
He says in Bhimavaram in West Godavari district, farmers park their paddy in the open and cover it with palm fronds. “Then it is left to the nature,” laments Murthy.
He says in Bhimavaram in West Godavari district, farmers park their paddy in the open and cover it with palm fronds. “Then it is left to the nature,” laments Murthy.
Acknowledging that both market and warehousing infrastructure needs are intertwined, Sunoor Kaul, director of Origo Commodities, stresses that farmers require the right financing and right storage for the right price.
Origo has 120 warehouses, and is the largest procurement and warehousing player in the undivided state.
Kaul says the Agricultural Produce Marketing Committees (APMCs) are an answer but they are usually very far from the fields. Online marketplace will help, provided the farmer can access it through phone, but then voice and not data is the preferred medium.
In its report on the cold chain infrastructure capacity in the country, released in the first week of September, the National Centre for Cold Chain Development (NCCD) admits that cold chains can have the greatest socio-economic impact and empower farmers to directly connect with multiple markets.
The study says the country has a cold storage capacity of 31.8 million tonne (mt) in space, which is short by 3.5 mt. A much quoted study conducted in 2010 by the National Spot Exchange Limited (NSEL) estimated the gap at 61 mt.
Undivided Andhra Pradesh has 404 cold stores with a capacity of 1.6 mt, according to the NCCD study.
But Murthy shares that “nearly 95% are not designed to store perishable produce such as vegetables and fruits. They are for dry products such as red chilli, tamarind and jaggery. There is an acute lack of technology to keep perishable items safe.”
Kaul also shares that “over 5% of the total crop harvested is lost during short-term storage at farms and drying on roads. For grains, the losses are between 10% and 12%."
These losses can be cut significantly by building market platforms with drying equipment, he says.
“There is an unmet warehousing requirement of 5 to 6 million tonne in Andhra Pradesh and Telangana. Even with clarity on policy and joint efforts by the governments and private players, it will take at least five years to bridge this gap," he points out.
Origo has plans to increase the number of warehouses in Andhra Pradesh and Telangana. The multi-crop farming practiced in these two states provides access to a lot of commodities, spreads the risk, and thus presents a good business opportunity.
Origo to double revenues to Rs 300 crore in FY16
Origo Commodities is banking on Andhra Pradesh and Telangana to double its revenue to Rs 300 crore in the financial year 2016.
The company plans to generate 60% or Rs 180 crore of the target from the two states.
By 2020, it aims to have a turnover of Rs 1,800 crore.
"Our strength is these two states as we started our procurement business here,” Kaul says, and adds that in the short-term, it is well-funded by the shareholders to execute its plans. Origo is also in talks with the state governments to manage APMC warehouses.
