The Food Corporation of India (FCI) should feel relieved that the private sector has stepped in to create additional foodgrain storage capacity, bridging the extant gap. However, it is difficult to fathom why much of the new warehousing capacity is sought to be put in place in grain-surplus states (production centres) — notably Punjab and Haryana, besides some others like Andhra Pradesh, Tamil Nadu and Maharashtra — rather than in grain-deficit states (consumption centres) where the procured grains are actually meant to be distributed. Though it can be argued that most of the grain-starved areas lack grain distribution networks, obviating the need for keeping large stocks there, this plea is not well-founded. For, if the proposed food security law comes through, which it probably will in some form or another, the government would be obliged to expand and revamp the grain distribution infrastructure in the backward areas where this measure is most likely to be implemented in the beginning. Such states may soon need more grain-holding capacity. Unless adequate quantity and timely availability of foodgrain are ensured in the targeted food security areas, the success of the new social programme may be doubtful.
The government’s objective should be to move as much of the accumulated stock as possible out of grain-surplus states and closer to the deficit ones. Unfortunately, this is not happening, not at least in the case of Punjab and Haryana which together contribute nearly 80 per cent to the total annual foodgrain procurement. As a result, inventories are accumulating in these states, straining storage capacity. A long-term solution lies, therefore, in augmenting capacity in regions closer to the consumption centres.
The real reason why the FCI faces a huge storage problem is that the government has procured and stored foodgrain far in excess of the needs of the public distribution system (PDS) and far in excess of buffer stocking norms. The government is currently holding nearly 58 million tones of foodgrain, close to twice the buffer stocking norm of 30 million tonnes and much higher than the expected PDS requirement of around 43.8 million tonnes, assuming that the PDS offtake remains at the last year’s peak level. The average annual procurement in the last few years has been above 55 million tonnes; last year’s mop-up being record 57.4 million tonnes. Thus, leaving alone the inventory carrying costs and the impact of such an ill-conceived policy on the foodgrain trade and market availability, the question that the government needs to answer is what will it do with the surplus stocks which, predictably, cannot remain unspoiled for long? In agriculturally and economically backward areas, foodgrain can at least be utilised for social welfare programmes. It would, therefore, be wise for the government to reflect on all aspects of foodgrain management — including procurement, translocation, storage and distribution — together and not formulate policy in silos.
