Govt hunts for storage space

As the country gets ready to harvest a record wheat crop, in excess of 90 million tonnes, 3.4 per cent more than 2011-2012, the government is grappling to clear its grain inventories to create space to accommodate the bumper crop.

Though the procurement process has begun, the big push will come in April when Punjab, Haryana and western Uttar Pradesh start sending in their crop, which together account for more than 80 per cent of the country's total production.

However, compared to last few years, storage space available with the Food Corporation of India (FCI), the nodal procurement and distribution agency, is better. In fact, senior officials in the Corporation are hopeful that before the onset of monsoon in June, most of the grains stored with them would be in proper storage facilities. An extra four million tonnes of storage space is expected to be added by June.

Given the fact that wheat procurement this year is expected to rise six per cent to 30 million tonnes, FCI and its state agencies have a huge challenge in hand. In March, the total amount of foodgrain in the central pool totalled 50 million tonnes (mt), while the total storage capacity available with the Corporation was 30.2 mt in covered space and 3.4 mt in uncovered scientific storage, also known as covered area plinth (CAP).

 

GROUND REALITIES

* 50 mt grain stocks expected by April 1

* 90 mt production expected in 2012-2013

* 30 mt procurement target, 6% more than 2011-2012

* Big jump in procurement expected from Madhya Pradesh

* Centre planning to move wheat from Madhya Pradesh to Rajasthan to create space

States have 20-22 mt of space of their own. In all, 56 mt space is available in the country (both permanent and CAP), which also includes that of the states, of which central authorities have very limited control.

However, it is not that all the grains stocks are stored in scientific warehouses. Barring the Corporation’s own available permanent storage space of 30.2 mt and some with the state government, the remaining grains are stored in CAP and other facilities which do expose them to vagaries of nature to some extent.

In fact, officials believe that 15-18 mt of foodgrain will not be stored in ideal conditions even as procurement for the new season starts next week.

Officials said the biggest jump in procurement will come from Madhya Pradesh, which has planned to procure 6.3 mt of wheat, 40 per cent more than this year.

The Corporation has planned to move wheat procured from the state to neighbouring Rajasthan as Madhya Pradesh has limited space.

“Rajasthan has a long summer and monsoon sets in late. Hence, wheat can be safely kept there,” said another official.

The Centre’s best effort to liquidate some of its existing stocks and lessen the burden on procurement and storage has not yielded much result till now. Its proposal to allocate an additional 26.5 mt of foodgrain from the central pool to states for distributing through the public distribution system was not approved by an empowered Group of Ministers (EGoM) because of financial constraints.

The finance ministry would have to bear an additional food subsidy of Rs 33,000 crore because of the extra allocation. The panel of ministers also did not approve another proposal to enhance grain allocation to above poverty line families from the current average of 10.5 kg per month to 15 kg.

Opening export of wheat for private traders have also not been a grand success as from October 2011 just 550,000 tonnes of wheat has been exported from the country.

“The prime reason for this has been the sharp drop in international wheat prices, which has made exports unreasonable,” an official from an international grain trading firm said.

Global wheat prices have tumbled by over 17 per cent in the last one year on huge inventories.