What is the cause of huge food grain wastage in India?

How absence of logistics & supply chain management causes losses to the public exchequer every year

Amongst the myriad supply chains, supply chains for food grapple maximum with the problem of waste at all stages. Unlike the fresh produce which is highly perishable and has a limited life, India has the notorious distinction of having the highest ,ever increasing spoilage in a comparatively easier to manage food grains chain—wheat and rice supply chain. The scale of waste is staggering.

In the pre-independence era and the decades following independence, India was always short of food grains. From 1947 until the mid-1960s, we were dependent upon foreign aid, leading a ship-to-mouth existence. And we did not and could not waste much as we simply did not have enough. For a large majority of Indians, PL 480 programme that authorised wheat shipments to India was an often-despised alphanumeric code denoting American imperialism rather than a reminder of American benefaction.

As green revolution succeeded, within four decades our supply chains earlier afflicted by widespread shortages were slowly saddled with a problem of plenty. In fact, news regarding wheat rotting in FCI warehouses with regularity has already desensitized us to such colossal waste; now it ceases to alarm us.

A quick glance at the stock of rice and wheat held in central pool from 2005 onwards reveals how the stocks have swelled. But in tandem with the rising stocks, the waste has gone up drastically. An RTI query in 2010 brought to light how within ten years during 1997 and 2007 itself, 1.83 LT of wheat, 6.33 LT of rice and 2.20 LT of paddy was wasted. Thereafter, as per rough estimates, situation has not improved.

These huge volumes of food grain spoilage in the supply chains are appalling when one looks at India’s position in the Global Hunger Index (GHI). Out of 76 countries, India ranks at 55 in the index below Mali ranked 28 and Sri Lanka at 39th place. Nepal, Uganda and Angola rank at 44, 52, and 54 respectively, above India. The countries in the GHI index are from the cohort of developing countries as most of the developed countries having a score below five do not find a place in the index. With   22 % of Indian population below poverty line and barely surviving, even a portion of the spoiled food grains could have fed millions. 

Such spoilage creates front-page news usually with the onset of monsoons and fades away in due course. This time around, FCI is already staring at handling, storing and disposing 27 million tonnes of wheat. Moreover, the grain is substandard due to relaxed procurement norms to help farmers affected by unseasonal rains and, therefore, can be stored for a shorter time than usual. Even if FCI releases around 20 million tonnes to Public Distribution System (PDS) and schemes like mid-day meals in schools as planned—where children of a lesser God would consume it—it would need to sell off the rest in the open market. But the 7 million tonnes of grain being below par in quality is unlikely to find buyers.

This time the rot may be attributable to a specific government policy in large measure but at other times, in fact always, the supply chain issues or specifically logistical problems lie at the root of waste: lack of warehousing capacity and sub-par storage conditions, damage during transportation, and exposure to elements of nature.

Every year we spend crores of rupees out of public exchequer for preventing decay—but to no avail—and then spend a fortune again to dispose of the piled up waste. We would rather not produce the crop in the first place as production takes a toll not only on the natural resources like soil and water but also impacts environment because of green house emissions. On the other hand, we could produce other crops like pulses, which we import very often. The Prime Minister recently appealed to the farmers to grow pulses on part of their land. But such appeals in all likelihood will go unheeded as long as distorted incentives to produce cereals—wheat and rice—continue.

From production of food grain to its movement through several intermediate stages until it reaches the end consumer, we have never viewed the various processes as linked organically in a supply chain. No wonder that we have not been able to reduce the wastage to acceptable levels as our discourse about food grains remains confined to agriculture, storage and price—fallout of a silo approach. Unless various parties realise that they are working together as part of a supply chain, collaboration among them to reduce wastage at each stage would remain a dream and, hence, nothing is quite likely to change.

It is amazing indeed that generalists and not experts have tackled—rather not tackled—a supply chain problem as chronic and serious as this. Unless we get our perspective right and implement solutions by supply chain professionals, we will continue to hear about putrefaction during procurement, torn grain bags during transportation and rodents devouring food grains during storage in godowns while poor still starve to death.

Prashant K Singh is a logistics and supply chain management professional with the Indian Air Force. The views are personal.

This is Prashant's first post on his blog, Unshackled, a part of Business Standard's platform, Punditry.

He tweets as @ZenPK