Silos in 4 states to make space for growing grain stocks

Faced with mounting grain stocks, the food ministry has expedited the process of setting up modern grain silos with capacity of two million tonnes in the major foodgrain-producing states of Uttar Pradesh, Madhya Pradesh, Punjab and Haryana.

"The silos will be part of the overall additional storage capacity of 15 million tonnes that the ministry, along with Food Corporation of India, is currently working on," said a senior food ministry official.

Currently, the government has about 64 million tonnes of storage space, including 20-25 million tonnes of a temporary set-up.

As on April 1, foodgrain stocks were estimated at about 54 million tonnes, almost 10 million tonnes more than last year. The inventories are expected to rise further in the coming months due to a bumper wheat and rice harvest.

Grain production in 2011-12 is projected at 255 million tonnes, about four per cent more than last year. Officials said procurement by state agencies would stand at 55-60 million tonnes in 2011-12, four-five million tonnes more than last year.

Each silo would have a capacity of 25,000-50,000 tonnes and can store grains for a longer duration than traditional godowns.

While godowns are square-shaped, silos are tall and cylindrical, which allows these to store more grains. Silos are typically linked with the railways to facilitate transportation of more grains, while traditional godowns usually do not have such facilities.

The official said the modalities were finalised after an empowered group of ministers had, in February, approved the construction of silos to tide over the acute storage problem, owing to the record procurement of grains. The silos would be constructed through public-private partnerships (PPPs), as recommended by the Planning Commission.

To attract private players, the government would provide viability gap funding (VGF) if the land is provided by a state agency. "If the land is not provided by a state agency, the silos would be constructed through the PPP mode, and VGF would not be provided," the official said. The Public-Private Partnership Appraisal Committee would vet all such proposals.

The official said to devise a method for the equitable distribution of silo capacity, the ministry had worked out a method through which states that had un-approved storage from quantities allocated earlier would be given priority.

The Planning Commission has been entrusted with the task of preparing the draft model concession agreement and a request for proposal. The awarding of contracts, based on the requests received, would start as soon as the formalities are finalised.

"Capacity would be added both in foodgrain-procuring, as well as consuming states," the official said.

In India, wheat is largely produced in northern parts of the country, while its consumption is distributed across the country. Though paddy is produced in large quantities in the eastern and southern regions, these areas have poor storage facilities.

"State governments would be duly consulted before setting up these silos, and the locations would be finalised by the Food Corporation of India’s board of directors," the official added.