The latest Union Cabinet decision of creating additional decentralised grain storage at the block level is a positive step towards strengthening the agriculture sector.

The new initiative tries to address two of the most important objectives of farm laws — strengthening/expanding the market infrastructure and ensuring remunerative prices to farmers. The public investments will be managed through the cooperative sector as opposed to corporate sector under the farm laws. Here are some of the important aspects that need to be considered while piloting the initiative.

It is widely acknowledged that checking post-harvest losses is critical for achieving food security. In India the average post-harvest losses range between 10-16 per cent for major cereal crops and the losses are as high as 26 per cent in the case of wheat and 34 per cent in the case of fruits and vegetables.

Reducing post-harvest losses should be a key objective of the new storage infrastructure.

It is disturbing to see grains, amounting to thousands of tonnes, getting wet in the market yards. Market yards fail to provide basic protection to the produce inside the yard. These issues also adversely affect the grains that are just harvested (farm level) and also the crops that are about to be harvested resulting in huge losses for farmers.

It is a pity that the State governments are not able to provide basic storage facilities in the market yards depriving farmers remunerative prices and affecting the nutritional value of grains.

In this context, the new initiative should prioritise strengthening the infrastructure in the existing market yards and create storage facilities within them, wherever possible. This would not only be cost effective but also help reduce losses.

Thus, priority should be to provide safe and secure market yards, especially protecting stocks from natural calamities. This requires coordination and cooperation between the States and the Centre.

Governance Issues

However, placing food storage under the purview of agricultural cooperative societies appears to be puzzling in the context of another high-profile government initiative — Farmer Producer Organisations (FPOs). The main objective of promoting FPOs is to address the well-recognised limitations of co-operative societies and it is aimed to cover all the blocks of the country.

FPOs are also involved in post-harvest handling of the produce that may come in conflict with the agriculture co-operatives.

While the inefficient functioning of agriculture co-operatives is widely acknowledged, the reasons for handing over the implementation of the storage infrastructure along with financial responsibilities to this sector are not clear, especially when FPOs are being run as businesses with better governance structure.

The problems associated with agriculture co-operatives include elite capture, bureaucratic/political interference, poor marketing. The measures being taken to resolve them need to be spelled out.

Besides, multiplicity of institutions with cross-cutting objectives are likely to dilute their effectiveness.

It is easy to create infrastructure but managing and maintaining it is a bigger challenge. India has an unenviable record of maintaining its infrastructure, be it FCI storage, drinking water systems, irrigation systems, etc. Capital maintenance expenditure (Capex) is rarely incorporated into annual budgets. More importantly, none of these systems are financially viable due to various reasons.

Given the poor track record of co-operatives, it is unlikely that the new initiative would be viable even in the medium run. Being aware of this fact, the Centre tried to encourage the private sector through farm laws to invest in marketing infrastructure.

After the repeal of the farm laws, the Centre adopted an indirect way through self-financing. But putting the initiative under the co-operative umbrella could prove counterproductive. While elite farmer lobbies have vehemently opposed the farm laws, elite capture is rampant in co-operatives.

As a result, small and marginal farmers lose on gaining access to competitive markets and getting remunerative prices.

Policies formulated for small and marginal farmers often end up serving the interests of medium and large farmers.

Given the political bottlenecks for implementing farm laws, the food storage initiative would have served better if implemented under private-public-people (PPP) initiative in the lines of FPOs. Even bringing it under the umbrella of FPO would have been a better option.

Quality Infrastructure

That said, modernising the existing storage infrastructure should be a priority. The move should be to go beyond grains and create storage infrastructure for perishable commodities (fruits, vegetables, milk, meat, fish, etc.).

Given the increasing production of horticultural crops, there is need for creating adequate storage facilities. While doubling farm incomes is linked to cultivation of high value crops (horticultural), providing sufficient storage infrastructure for curbing distress sale and wastage is a necessary condition. The value of food losses (agriculture, horticulture, milk, meat and fish) are above ₹1,40,000 crore a per year.

India has the storage capacity for only one-eighth of its annual perishable produce. This requires judicious planning and estimation of storage requirements for different products across the regions of the country.

Maintaining the quality of food is important. Any compromise on quality would adversely affect nutrition security. Often the PDS distributes poor quality grains due to low quality storage infrastructure with primitive technologies (FCI godowns) and long spans of storage.

In the case of perishables, processing can increase the longevity of the food and may reduce its nutrition value. Again, modern technologies are required for ensuring high quality processing.

Reddy is Director, Livelihoods and Natural Resource Management Institute, Hyderabad