Better Food Storage?

Suman Sahai

It is estimated that around 20 percent to 25 percent of India’s food grain production is lost due to improper or inadequate storage. That amounts to approximately 60 million tonnes of food grains each year, almost as much as what India actually stores in its official godowns. Almost 120 million tonnes of fruits , vegetables and other perishable commodities, twice the volume of grains, are similarly wasted due to delayed and inadequate transportation, lack of cold chains as well as treatment and storage facilities.

The absence of a supply chain is seen to be the major bottleneck. Responding to this line of thinking , the government has set up a new . The aim is to improve the storage capacity in the country and also help producers and consumers get a better deal by cutting out intermediaries and wastages. The 2011-12 budget made cold chains and post-harvest storage a part of infrastructure and made them eligible for income tax relief.

The initial focus for the WDRA has been on the agricultural sector and the central government has announced the Rural Godown Scheme to promote the construction of warehouses in rural areas. At present the WDRA scheme includes 40 agricultural commodities like cereals, pulses and spices.

If the WDRA scheme is implemented properly and corruption is contained, it will give farmers a concrete advantage and some control over their produce. In the absence of available storage, farmers are unable to hold their harvest and have to resort to distress sales immediately as the harvest comes in. This provides middle men and traders with the opportunity to drive down prices and buy up the agricultural produce of the season at rock bottom prices. They can store the grain and sell at high prices later but the farmer cannot do this in the absence of affordable and accessible storage.
Today most food warehouses in rural India are for captive use, very few are business models. To remedy this, the WDRA has recently registered 50 warehouses across the country, which will now be able to issue negotiable warehouse receipts. Negotiable Warehouse Receipts have been devised by the WDRA to enable farmers to get the best price for their produce and help bring down prices of commodities by cutting out the arbitrage earned by middlemen which they do by setting different prices for the same commodity.
Warehouses who want to participate in the Negotiable Warehouse Receipts scheme must get themselves registered by an accredited agency. Eight such agencies, four each in the public and private sector, have been recognised by the WDRA. Accredited warehouses and the Warehouse Receipt scheme are designed to ensure that the concerned warehouses have the facilities for safe and effective storage. They will also be required to do grading and sorting according to quality of the produce and fix expiry dates for the commodities so they can be moved out of storage for use. To give the stored products financial and transactional value, the WDRA has formed linkages with the Indian Banks Association to ensure that banks honor the receipts from registered warehouses.

Beginning with 50, the WDRA has made plans to accredit another 300 warehouses in the months ahead. But before this scheme is made fully operational, farmers will have to be trained in the procedures of storing their produce and the rights and obligations that they will have with such storage. Costs of such storage(including transportation to site from their fields ) will need to be worked out to see how feasible such storage facilities will be and how suited to small farmers.

Small farmers create small but critical surpluses which will have to be accommodated to make storage meaningful. Otherwise, big farmers and traders will be the only ones to benefit from the government’s scheme of better storage. Vigilance will be required in this scheme to ensure that it does not get hijacked by the big players to facilitate their commodity trading by having secure and subsidized storage. With agricultural decisions being the jurisdiction of state governments, it will have to be seen how the states intervene in the execution of issues like negotiable receipts and ownership of the produce.

A note of caution must be sounded on any plans to take a step by step approach in this matter. The argument of economic viability must not lead us into the trap of creating a national facility that first accommodates big account holders and pushes small farmers
away, to be accommodated later.