Building capacity

Grain storage facilities will benefit all stakeholders

Amid farmers’ ongoing protest to assert their demands, the Centre last week unveiled a plan for the world’s largest grain storage facility within the cooperative sector, which should help the farm sector in the long run. While the pilot is targeting Primary Agricultural Credit Societies (PACS) in 11 states, the storage facilities are expected to finally be completed over the next five years with a capacity of 70 million tonnes of foodgrain. Although the plan aims to directly address the foodgrain storage capacity shortage in the country, there are bound to be other positive spillovers for all stakeholders, including farmers and end consumers. Numbers from the Food and Agriculture Organization (2021) suggest that while several countries enjoy surplus storage capacity, the same cannot be said for India. Total foodgrain production in India is 311 million tonnes (mt), but the total storage capacity is just 145 mt. At present, grain management (procurement and storage) facilities are provided by the Food Corporation of India, Central Warehousing Corporation, and a host of other big and small government agencies.

In this context, involving the PACS to develop their godowns, custom hiring centres, processing units, and fair-price shops is a step towards decentralised storage systems. This will benefit the agriculture sector by augmenting infrastructure across the country. Notably, public procurement of foodgrain at the minimum support price (MSP) is limited mainly to wheat and rice and is geographically concentrated. It is thus hoped that this new initiative will work towards diversification of the government agencies’ procurement process, and help percolate the benefits to farmers across the country. At the same time, PACS, the smallest cooperative agency working at the grassroots level, have so far been involved in extending short-term credit for agricultural production. The last link in a three-tier cooperative credit structure, they extend outreach to the rural masses engaged in agriculture and allied services, which makes the PACS well-suited to undertake grain management in villages and gram panchayats.

Indeed, the new grain storage plan could ultimately metamorphose the PACS into multifunctional economic entities, further strengthening the role of cooperatives in the agricultural sector. This also underscores the pivotal role of cooperatives in shaping the rural and agrarian landscape of the Indian economy. The plan will also have other benefits, including a reduction in foodgrain wastage, which will eventually result in higher income for farmers and lower prices for consumers. Incidents of distress sales are also likely to go down, along with a drop in transportation cost for agri produce. To be sure, the success of this initiative depends heavily on the efficiency of the PACS concerned, along with inter-PACS connectivity and their engagement with the local and higher levels of the government. To augment their capacity, the central government allocated Rs 2,516 crore for computerisation of 63,000 functional PACS. While Rs 1.25 trillion is expected to be spent on the grain storage plan, involving the convergence of different schemes, it will require careful implementation across diverse regions with different requirements to attain the intended goals.