Pvt players facing storage blues

Private retail and warehousing companies will have to pay the price for the record wheat procurement by the central government agencies.

These companies had hired nearly 500,000 tonnes of storage capacity from the Food Corporation of India (FCI) after two consecutive years of low wheat procurement by the government.

With wheat procurement set to touch a six-year high of 18 million tonnes, the FCI silos are full and these companies will have to look for space elsewhere.

Such companies have rented space in FCI godowns due to their large capacity and strategic location. Reliance Retail had hired a 14,000-tonne storage space from FCI, near Lucknow, for its retail operations.

Certain state warehousing corporations have also taken FCI godowns on lease. However, grain trading companies say they do not see any immediate space crunch since most of them have stayed away from large scale wheat purchases.

The corporation, which has a total storage capacity of 24 million tonnes, is estimated to be earning about Rs 10 crore annually as rent. Currently, the government has a storage capacity of 40 million tonnes that includes those of different states.

The stock of grain (wheat and rice) in the central pool as on May 1 was 30.45 million tonnes, 5 million tonnes more than on the corresponding date last year.

The jump in central pool has led to a better utilisation of storage capacity with FCI and state warehousing agencies. Their capacity utilisation has gone up from 62.5 per cent to 75 per cent this year.

A bumper wheat procurement and higher rice purchases by the government agencies has also prompted the FCI to increase its monthly wheat movement from Punjab and Haryana by about 50 per cent.

"There has been a sharp jump in wheat arrivals in mandis such as Khanna, Sangrur, Ferozpur and Sangrur. We are shifting grain from such areas of glut to consuming states such as West Bengal, Maharashtra, Karnataka and Kerala. Consequently, against a normal monthly movement of 800,000-900,000 tonnes of wheat from Punjab and Haryana, we are now moving 1.4-1.5 million tonnes," said Alok Sinha, chairman and MD, Food Corporation of India.