Agri Business

Centre saves ₹8,000 crore by tapping additional foodgrain storage capacity

Subramani Ra Mancombu Chennai | Updated on May 01, 2021

Union Government decides to not construct open system any longer to store grains

The Union Government has saved at least ₹ 8,000 crore by deciding to utilise 20 per cent additional foodgrain storage capacity in its warehouses, even as it has decided not to construct the open cover and plinth (CAP) storage from the beginning of the current fiscal.

“Under CAP storage wheat quality gets affected, while its longevity is also shortened. Therefore, we have decided to go for construction of modern silos. We will be setting up 100 lakh tonnes (lt) modern silos storage capacity,” Union Food Secretary Sudhanshu Pandey told BusinessLine.

CAP till now has been a standardised system of foodgrain storage since the country lacked storage capacity. In this system, the grain packed in gunny bags is stacked, generally, above a wooden plank and covered with a waterproof material. But the storage has always been vulnerable to weather developments such as strong winds and heavy rainfall.

The current initiative follows a statement made by the Centre made in Parliament last year that it planned to increase the storage capacity by raising the height of the stacks 20 per cent.

The warehouses had the capacity for additional storage of 20 per cent and more. But, it was left to the discretion of the managers before the current change was made.

One of the hurdles in utilising the additional capacities earlier was that foodgrains were stored in 100-kg gunny bags. This then curbed the number of stacks in the godowns in view of the weight, the Food Secretary said.

But the International Labour Organisation (ILO) recommended packaging of grains in 50-kg bags to ease the burden on workers. Thus, the storages got a bit of leeway to increase the height of stacks.

“Earlier, 140 tonnes were stored per stack of 20 bags. Now, with the stack height being raised to 25 bags, 174 tonnes can be stored per stack ,” Pandey said.

“This has resulted in an additional 160 lt storage capacity being created. In the conventional system, it will take at least Rs 8,000 crore to construct CAP storage of such capacity. It will also take years to construct it,” the Food Secretary said.

To illustrate the Food Ministry’s case, he said that last year the Centre decided to construct 19 lt of CAP storage. But only 3-4 lakh tonnes of storage was constructed and there was a deviation for the rest,” Pandey said.

Following this, the Food Ministry decided to not construct CAP storage under open sky. The Centre will no longer store any of its grain under CAP storage, he said.

Last week, Punjab Food and Civil Supplies Minister Bharat Bhushan Ashu told BusinessLine that the northern State would be forced to use CAP storage this year to store wheat since it had stocks of 2019 and 2020 to the tune of 120 lt lying with it.

“The Centre should shift these grains to consuming States if it does not want us to go for CAP storage,” he said.

“Some foodgrains were stored under CAP last year. The Centre will shift these grains to covered storages soon. They will also be moved to States that consume wheat totally and are in deficit,” the Union Food Secretary said.

Madhya Pradesh, Gujarat and Rajasthan would be the States where the surplus wheat from States such as Punjab would be moved, he said.

On April 16, Pandey told a press briefing that all foodgrains would be stored in modern steel silos by 2024-25, while conventional storage systems would be phased out gradually.

The storage of foodgrains, wheat and rice, assumes significance in the wake of the Centre procuring buffer stocks for distribution through ration shops. The grains will be distributed under various welfare schemes.

Wheat and rice are being procured at the minimum support price of ₹ 1,975 and ₹1,815 a quintal, respectively, for the current season to June. Last year, the Centre procured a record 38.99 mt of wheat and this year it has targeted to procure 42.73 mt. In the case of rice, it procured 77.34 mt last season.

This season, the Centre has procured over 71 million tonnes (mt) of rice and 23.42 mt of wheat, a rabi season crop. Both the procurement, which continue, come amidst projections of a record wheat crop of 109.24 mt this season compared with 107.86 mt last season. Rice production is also estimated at a record 120.32 mt against 118.87 mt last season.

In addition, the Food Corporation of India (FCI), which procures and stores the buffer foodgrain stocks, is carrying record wheat stocks of 27.30 mt against the mandatory 4.46 mt of operational stock and three mt of reserves.

The FCI also has 29.11 mt of rice stocks besides 31.06 mt of paddy that can yield 20.79 mt of rice.

Published on April 28, 2021

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