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India to add 6.5 mlllion T grain storage space this year

By: | at 08:00 PM | Channel(s): Transport Intermediaries  

India aims to raise grains warehousing capacity about 10 percent by March 2012, the head of its storage agency said, as it tries to ensure its record 65 million tonnes of stocks do not rot.

Warehouses in India, the world’s second-biggest rice and wheat producer, are overflowing after five bumper harvests and some grains are stored under tarpaulin, risking decay.

But the government has only allowed limited exports as it waits to see what quantities will be needed for its plans to increase subsidised sales in the country, where an estimated 500 million people live in poverty.

On June 1, India’s grain stocks touched a record high of 65.60 million tonnes—27.64 million tonnes of rice and 37.83 million tonnes of wheat—against a combined storage space of 63 million tons.

The government has some incentives for building storage, such as assured rent for 10 years, and it is now hoping private firms will create 13.5 million tonnes of storage space.

“Of the 13.5 million tonnes, five million tonnes will be ready in 2011/12. Also, an additional 1.5 million tonnes will be made available by the CWC and state warehousing corporations,” B.B Pattanaik, managing director of state-run Central Warehousing Corporation (CWC), told Reuters in an interview.

“So, this year we will have an extra 6.5 million tonnes,” he added.

Grains output in 2010/11 was another record for India, one of the world’s largest producers and consumers of wheat and rice and the current crop year should see total grains production again at a new high of 245 million tonnes.

The CWC has 10 million tonnes of storage capacity, state-run Food Corporation of India, the main grain procurement agency, has 32 million tonnes, while state warehousing corporations have a combined capacity of 21 million tonnes.

The state warehousing corporations are owned jointly by the CWC and state governments.

The storage space with the government agencies includes makeshift facilities, popularly called “covered and plinth”, and private warehouses hired on rent.

Stung by the shortage of grain bins, last week the government allowed exports of one million tonnes of non-basmati rice and an unspecified amount of wheat, easing a ban clamped down since 2007.

But wheat shipments seem improbable as global prices have slipped to unattractive levels.

“Largely, warehousing is a sign of inefficiency but it is a necessary evil in a country like India,” said Pattanaik, because of poor infrastructure and its policy of subsidised grain sales.

The government typically buys around a third of total grains output for subsidised sale to the poor, to build reserves for emergencies and protect farmers from distressed sale.

Analysts say storage problems will exacerbate once a Food Security Bill becomes law, which aims to increase the amount of subsidised grains supplied to the poor.

It will require about 61 million tonnes of grains a year on top of reserves and emergency stocks.

Food Minister K.V. Thomas wants to meet state government representatives to help augment storage space.

Pattanaik said modern silos, popular in leading wheat producers such as the United States and Australia, were not options for India.

“That is not practical for India which is also a major rice producer. You cannot store rice in silos. It tends to break due to husk and bran. Silos are primarily for wheat producing nations,” said Pattanaik. (Reuters)