World’s Largest Grain Storage Plan: Centre to Implement Pilot Project in 10 Districts

What’s in today’s article?

• Why in News?
• Storage of Foodgrains in India
• What are the Challenges and Solution for those Challenges Associated with Foodgrains Storage?
• News Summary
• Role of the Committee & Significance of the Plan
• What is Primary Agricultural Credit Societies (PACS)?

 

Why in News?

• The Union Cabinet has approved the formation of an Inter-Ministerial Committee (IMC) for facilitation of the “world’s largest grain storage plan in cooperative sector”.

 

Storage of Foodgrains in India

• The procurement, storage, and distribution of foodgrains is undertaken by the Food Corporation of India (FCI), along with agencies of the state governments.
• Since the advent of the Green Revolution in the early-1970s, India has avoided famine even during adverse weather conditions.
• The availability of food grains (even in adverse weather conditions or otherwise) at the country level has further been ensured with a carefully designed food security system by the government.
• This system has two components: (a) buffer stock, and (b) public distribution system.
• Buffer Stock –
  • Buffer Stock is the stock of food grains, namely wheat and rice, procured by the government through the FCI.
  • The FCI purchases wheat and rice from the farmers in states where there is surplus production.
  • The farmers are paid a pre-announced price for their crops. This price is called Minimum Support Price (MSP).
• Public Distribution System –
  • The food procured by the FCI is distributed through government regulated ration shops among the poorer section of the society.
  • This is called the Public Distribution System (PDS).
  • Ration shops are now present in most localities, villages, towns and cities.
• At present, India’s foodgrains production is around 3,100 lakh tonnes while the storage capacity is only about 47% (1,450 lakh tonnes) of the total output.

 

What are the Challenges and Solution for those Challenges Associated with Foodgrains Storage?

• In August 2021, Standing Committee on Food, Consumer Affairs, and Public Distribution (Chair: Mr. Sudip Bandyopadhyay) submitted its report on challenges associated with foodgrains storage in India.
• Along with identification of challenges, the committee also suggested solutions for the same.
• Procurement –
  • The Committee observed that most of the procurement operations for foodgrains are carried out by state agencies.  The share of FCI in direct procurement is less than five percent. 
  • The Committee recommended that the central government and FCI should assist the state governments in creation of adequate infrastructure for effective procurement
• Decentralised Procurement –
  • Under the Decentralised Procurement Scheme (introduced in 1997-98), the state governments utilise the foodgrains procured locally from within the state for distribution under various schemes. 
  • In case of excess procurement in any state, the foodgrains are handed over to FCI for storage or distribution to other states. 
  • The scheme: (i) reduces the overall transportation cost, (ii) encourages procurement in non-traditional states, and (iii) enables procurement of local foodgrains, which may be more suited to local taste.
  • The Committee observed that even after 23 years of the inception of the scheme, it has been undertaken by only 8 states in case of wheat, and 15 states in case of rice.
  • The Committee noted that the scheme has contributed remarkably to the increased efficiency of the Public Distribution System (PDS), by making it possible to supply foodgrains suited to local taste. 
  • The Committee recommended that the Department of Food and Public Distribution should encourage the adoption of the scheme in non-traditional states.
• Refusing Procurement at Centres –
  • The Committee noted that lower staff posted at procurement centres sometimes refuse to procure on non-bonafide technical reasons, such as moisture content in the produce. 
  • This causes great hardships to the farmers, thus leading to distress sale. 
  • It recommended that foodgrains should not be rejected on flimsy grounds if they conform to the Fair Average Quality norms.
• Storage Capacity –
  • The Committee noted that despite various audits for optimum utilisation of storage capacity, the utilisation of hired storage facilities is still very high. 
  • Meanwhile, the FCI-owned facilities remain under-utilised. 
  • The Committee recommended FCI to maximise utilisation of owned facilities before hiring. 
  • Hiring should be done only if absolutely necessary to minimise the cost incurred in paying rent.
• Construction of Godowns –
  • The Committee observed that FCI could not achieve the targets for construction of godowns in 2020-21. 
  • It recommended expediting the ongoing construction projects, particularly in the north-eastern states, Jammu and Kashmir, Andaman and Nicobar Islands, and Lakshadweep.
• Damaged Foodgrains –
  • The Committee noted a very high value of damaged foodgrains during 2017-20 (Rs 12.6 crore).
  • It noted that damaged foodgrains accrued mainly due to pest attacks, exposure to rain, floods, leakages in godowns, procurement of poor quality stocks, and negligence of officials.
  • It also noted a very slow movement of foodgrains to distribution centres, which leads to huge piling of foodgrains and rotting.
  • The committee recommended creation of storage capacity in: (i) major wheat producing states (e.g., Haryana and Punjab), and (ii) other states (e.g., Maharashtra, Tamil Nadu, and Rajasthan) where non-cultivable land may be available for this purpose.
• Transit Losses –
  • The Committee noted that despite various initiatives of the Department to reduce storage and transit losses of foodgrains, transit losses are still very high (Rs 281 crore during April-October 2020). 
  • It recommended that strict action should be taken against negligent officials to hold them accountable for unjustified losses.
  • It recommended FCI to strengthen its vigilance mechanism in coordination with states and ensure proper functioning of monitoring mechanisms.

 

News Summary

• The Union Cabinet has approved a Rs 1 lakh crore plan to create the “world’s largest grain storage plan in cooperative sector” by convergence of various schemes of the Ministries of Agriculture and Farmers Welfare, Consumer Affairs, Food and Public Distribution and Food Processing Industries.
• To ensure timely and uniform implementation of the plan in a professional manner, the Ministry of Cooperation would implement a pilot project in at least 10 selected districts of different States.
• The committee will be chaired by the Union Cooperation Minister.

 

Role of the Committee & Significance of the Plan

• The committee will lay guidelines for creation of infrastructure such as godowns, for agriculture and allied purposes, at selected ‘viable’ Primary Agricultural Credit Societies (PACS).
• The plan would help reduce crop damage and prevent distress sale by farmers, besides strengthening the country’s food security and creating job opportunities in rural India.
• Under the plan, the government will create 700 lakh tonnes of grain storage capacity in the cooperative sector over the next five years.
• Union Home and Cooperation Minister Amit Shah said that lack of agricultural storage capacity leads to wastage of foodgrains and farmers are forced to sell their crops at low prices.
• With this plan, farmers will now get modern grain storage facilities in their blocks through PACS, so that they will be able to get fair prices for their grains.

 

What is Primary Agricultural Credit Societies (PACS)?

• PACS are village level cooperative credit societies that serve as the last link in a three-tier cooperative credit structure headed by the State Cooperative Banks (SCB) at the state level.
  • Credit from the SCBs is transferred to the District Central Cooperative Banks (DCCBs), that operate at the district level.
  • The DCCBs work with PACS, which deal directly with farmers.
• PACSs provide short-term, and medium-term agricultural loans to the farmers for the various agricultural and farming activities. The first PACS was formed in 1904.
• Currently, there are more than 1,00,000 PACS in the country with a huge member base of more than 13 crore farmers. However, only 63,000 of them are functional.
• Setting up decentralized storage capacity at the level of PACS is expected to enable these primary credit societies to transform themselves into vibrant economic entities.
• Once the grain storage capacity is increased as per the plan, farmers will be able to sell their crops to PACS by receiving some advance payment at the MSP, and get the balance after the PACS sell the food grains in the market.

 

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Q1) What do you mean by Food Security?

Based on the 1996 World Food Summit, food security is defined when all people, at all times, have physical and economic access to sufficient safe and nutritious food that meets their dietary needs and food preferences for an active and healthy life.

 

Q2) What is primary objective of Food Corporation of India?

Maintenance of operational and buffer stocks of food grains to ensure continued supply of essential food supply.

 

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Source: World’s largest grain storage plan: Centre to implement pilot project in 10 districts | PRS India