The Industry

The Industry

Agriculture is an undeniably important sector of the Indian economy and still accounts for almost 15% of its GDP. Close to 500 million people rely on agriculture as a primary source of income.

Over the last decade, India’s grain production has steadily increased due to initiatives and technology advancements taken up by the government of India at the farm level. But post-harvest loss of grains continues to plague the supply chain. During 2017-18 India has been projected to reach a record 284.83 million tonnes food grain production. The world bank stipulates that wastage of food each year can feed 1/3rd of India’s poor. Over 194 million Indians go hungry every day while food grain worth in excess of INR 75000 crores is damaged annually due to poor storage conditions.

The commonly used storage method at the state level currently is cover and plinth (CAP) storage, which is economical but loss of grains in this method is inevitable as it has very little control on the micro climate and is not an efficient deterrent to pests and spoilage due to moisture.

The Food Corporation of India (FCI) has over 30.5 to million tonnes of storage capacity in over 1900 godowns in India and is now looking at modernizing its storage and logistics.

India's Agri Prowess

From the 1970s until the late 90s, India’s Agri GDP grew from $ 25 billion to $ 101 billion. In the next 14 years from 2000 to 2014, Agri GDP leaped from $ 101 billion to $ 367 billion, registering an astonishing growth of $ 266 billion. Growth in Agri GDP in the last 14 years was 350% higher than the one achieved in the previous 30 years.

As per World Bank, India has brought about a landmark agricultural revolution that has transformed the nation from chronic dependence on imports to net exports. India’s agri exports saw an annual growth of $5 billion in FY18 to $38 billion For FY19, the agri-exports are projected to be $44 billion and $100 billion by 2022.

The world produces more “feed grains” than “food grains”, given that much of its food is meat-centric, in richer countries, 70% or so of grain production gets fed to animals. India’s net international trade in agricultural products fetches higher forex for the country than services or manufacturing

Poor Agri Infrastructures

India’s post-harvest loss is estimated to be ~ $7.5 billion. Lack of adequate post-harvest and food processing infrastructure results in wastage of more than 20% of cereals and 40% of fruits and vegetables.

Every year ~ 21 MT of wheat perishes in India due to inadequate storage and distribution, equivalent to the entire wheat production of Australia Due to limited reach of marketplace and adequate storage facilities, farmers travel at least 12 Kms to reach one, as against recommended 5 Kms.

Multi-level intermediation and wastage results in selling prices being as high as 250% of the cost at farm level, leading to recurrent food inflation

Modernising Food Storage

FCI has strategically located storage capacities across the country, however most of them are shabbily maintained or in dilapidated state, leading to rotting of food-grains due to

  • Pest attacks & lack of favourable environment for preservation
  • Exposure to floods, rains and leakages in the godowns
  • Lack of adequate quality control measures leading to procurement of poor quality stocks
  • Negligence on the part of the persons concerned in taking precautionary measures

FCI has taken steps to thoroughly modernise its assets in line with Govt’s commitments under NFSA. In the past new godowns were being constructed by FCI mainly through Private Participation under Private Entrepreneurs Guarantee Scheme (PEG). However, now FCI is prioritising augmentation and modernisation of its storage capacity in the form of steel silos through Public Private Partnership

Traditional Storage V/s Modern Silos

  • Efficient and mechanised handling of food-grain leading to reduction in wastage of grains during handling
  • Controlled fumigation & in-built temperature control mechanism leading to increase in shelf life of grains for > 5 years
  • Quicker turn-around-time as storage is in loose form as packing and unpacking of grains is not required in initial stages
  • Mechanised loading and un-loading of grains saves time & improves efficiency
  • Specialized transport wagons for ferrying of goods preserves spoilage during transportation (wagons provided by the Ministry of Railways)
  • Construction of Silos requires lesser land (2sq.ft) as compared to traditional Godowns (10sq. ft.) for similar tonnage

Social Impact

Modern silos projects create a positive social impact in the society. Each 50,000Mts capacity of silos creates an Impact of

  • Grain storage for over 30,000 Farmers
  • Yielding higher income to farmers by elimination of middle men
  • Preventing from pilferage by automation
  • Preventing 50,000 MT wheat from being infected which will feed ~ 8 lacs people yearly under the NSFA 2013 Act
  • Create employment for over 50 People directly and 200 Indirectly
  • Saving the Government of India an annual cost USD 130,000 in storage costs
  • Supporting and catering to the Government of India’s National food security act which covers over 2/3rd of India’s 1.32 billion population
  • Reducing the handling cost of the grain by ½
  • Bulk movement of grain from procurement centre’s to distribution centre’s