Silo storage needed to save grains

PS Rangi
Retired sr economist, PAU, Ludhiana

Despite the government intervention in terms of pricing and procurement of foodgrains, particularly wheat and paddy, the country continues to suffer on account of losses and wastage of foodgrains incurred in the post-harvest operations. Various studies put such foodgrain losses at 25 million tonnes per annum. In money terms, it translates to a whopping Rs 45,000 crore per year. It is estimated that total preventable (post-harvest) losses in India are equivalent to the total foodgrain production in Australia. These grains could feed about 120 million people for a year or the whole country for about six weeks.  

In recent years, about 25 to 30 million tonnes of wheat was procured by the public agencies, of which around 10-12 million tonnes was in Punjab. In spite of moisture gains (weight gain 2 to 3 per cent) in the case of wheat during the rains, the storage losses incurred by the public agencies are very high. Though post-harvest losses cannot be eliminated, these can be reduced through scientific handling, storage and transportation of foodgrains. This calls for incentives on adoption of scientific storage methods. 

Public agencies like the Food Corporation of India (FCI), the Central Warehousing Corporation (CWC) and the State Warehousing Corporations (SWCs) have played a significant role in the creation of storage infrastructure. The quantity of foodgrains being handled by them is increasing and so is the requirement of infrastructure for handling, scientific storage, timely movement of foodgrains and distribution.  Punjab, in particular, needs to have proper post-harvest management of foodgrains, particularly through high-tech silo storage system. 

Farmers in Punjab market about 155 to 190 lakh tonnes of paddy (100 lakh tonnes of rice is procured) and more than 110-130 lakh tones of wheat annually. In the absence of fast movement of grains from the state due to slack in demand from the consuming states and paucity of railway wagons, the carry-over stocks pile up. The covered storage capacity in the state is for only 100 lakh tonnes and the rest, especially the wheat crop, is stored under the covered area plinth (CAP) system, where the storage losses are very high. In June, about 150 lakh tonnes of wheat is kept lying under the CAP system in the open under polythene cover. The rains come in the first fortnight of July and this crop is lost both in quantity and quality during the rainy season. The crops get moisturised and insect/pest attacks on grains increase. 

In the last five-six years, about 5 lakh tonnes of wheat worth Rs 700 crore has been rendered unfit for consumption in Punjab. This should be a matter of concern to the government. Also, unhusked paddy from last year's crop and rice are lying, which require movement to the consuming states. The capacity of the Railways to move the foodgrains from the state is hardly 14 to 15 lakh tonnes per month. So wheat and rice are likely to be stored in the state for a prolonged period even if there is demand for these products.

The production of wheat is likely to increase in other wheat-producing states. In such a situation, it will be essential to improve storage where wheat can be stored for around four years without any loss. Some long-term storage (high-tech silos) has to be built with a capacity of 10 million tonnes in Punjab. Punjab State Warehousing Corporation and Markfed should build silos storage capacity and operate it on behalf of the Government of India as a measure of food security. Since silo storage is capital intensive and has a long gestation period, participation of the private sector should be encouraged.

The transfer of wheat from the fields to godowns involves a heavy cost of handling. The grains are unloaded in the market yard, cleaned (not graded), auctioned, filled in bags, weighed and stitched before transportation to godowns. It costs about Rs 18 per per quintal to the procurement agency plus commission to the arhtiyas at 2.5 per cent ad valorem, totalling Rs 60. If we add the cost of two gunny bags at Rs 25 each and transport cost up to godowns, the cost works out above Rs 185 per quintal.  

In the case of silo storage, these costs would be saved. Silos would be the purchase centres of the respective market committees and the farmers would bring their wheat directly there. It would be weighed before and after unloading the trolley, and the PSWC/Markfed would pay on the spot. As these agencies will save about Rs 185 per quintal, these can shift some portion, say Rs 40 per quintal, to the farmers as an incentive. This would benefit both the producers (in terms of time and better price) and the public agency (cost saving and quality grains). It will also reduce the glut, congestion and traffic hazards in the market yards during the peak season. This will increase the market efficiency and reduce dependence on commission agents, labour, gunny bags, space/glut problems, pollution and environment conditions in the city/congested markets, storage losses etc. 

With the withdrawal or reduction of subsidy on food production by developed countries and decision of gradual withdrawal from world food trade, India could emerge as a major player in the foodgrain trade. The system of grain quality control on a par with internationally accepted norms is required to make India globally competitive in food trade. The ultimate goal should be to have an integrated, modern and efficient system of foodgrain handling and scientific storage and distribution of foodgrains to the consuming centres through special bulk wagons so that losses are brought down to the minimum. Facilities for bulk handling of grain at ports should also be developed. The railway system will have to be modified accordingly. The movement of foodgrains from mandis to the bulk storage silos is also possible by pressing into service specially designed trucks for unloading the grain in the silos. Ultimately, such storage structure would cut down the cost of handling foodgrains in the state and the country. 

Punjab needs to start a pilot project for bulk handling and silo storage by creating a high-tech foodgrain storage capacity of 10 million tonnes. Ten big markets near railway tracks such as Rajpura, Malerkotla, Khanna, Jagraon, Barnala, Kotkapura, Moga, Sunam, Goraya, Jandiala, Kartarpur and Amritsar can be selected where one million tonne silo storage capacity each may be created. Sufficient space is available in the mandis. It will cost about Rs 10,000 crore and save grains worth crores annually. These stored grains would then fetch a better price — at least Rs 1,000 per tonne and yield extra Rs 1,000 crore per annum. Silo storage will be economically viable in the long run through no loss in storage and better price realisation of wheat in the domestic and international markets.