Upgrade of govt warehouses to cost Rs 4,000 cr

That government warehousing capacity is inadequate for storage needs is known — of the 65 million tonnes of foodgrain stock it currently has, about 28 mt is rented. Often missing in this play of figures, note analysts, is the dimension of quality of storage.

A lot of government storage lacks basic infrastructure, such as roofing and flooring. Of the 37 mt of storage with the various government agencies — Central Warehousing Corporation, Food Corporation of India (FCI) and various state warehousing corporations — in the country, the estimate is that Rs 4,000 crore is needed as investment for upgrade.

“The government does not want to increase its warehousing capacity beyond the mandatory buffer norm. Against the current buffer norm of 32 mt, the government owns 37 mt of storage facility, which requires Rs 1,000 a tonne for upgrade. Surprisingly, no new capacity has been added in the past 10 years,” said Naresh Golani, an analyst with Care Ratings. Total FCI-owned warehousing capacity went up marginally to 15.47 mt by March 2010, from 14.85 mt in 2000. Various state warehousing corporations did better, using a public-private partnership (PPP) model to develop warehouses, which resulted in a substantial rise in capacity to 13.65 mt in 2010, as against 8.85 mt a decade ago, a Fitch Ratings report said.

The real jump has been in contribution by private players, from 16.2 mt in 2000 to 54.6 mt in 2010. Of the non-government warehousing built over the past 10 years, average storage capacity per warehouse is 1,261 tonnes; 75 per cent of the godowns have a capacity of less than 1,000 tonnes. The development of small and medium godowns indicates most were built by farmers or a community of farmers, to ensure distress sales are reduced and better prices paid for produce.

Apart from this, a few large national-level players have emerged over the decade, owing to the available capital subsidy, including National Bulk Handling Corporation, National Collateral Management Services, Adani Agri Logistics and Ruchi Infrastructure.

India has total agri warehousing capacity of around 91 mt at present to store and conserve such large quantities. State agencies own 41 per cent of the capacity and the balance is distributed among private entrepreneurs, cooperative societies, farmers, etc. However, these government agencies use 66 per cent of the space, including a hired capacity of 23 mt.

Though storage capacity has increased at a compounded annual growth rate of 6.7 per cent during the past decade, 20-30 per cent of the total grain harvest is wasted due to lack of storage capacity, regional imbalance in warehouses, lack of adequately scientific storage and inefficient logistic management.