India Hopes Private Warehouses Will Reduce Food Grain Storage Problem

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The Indian government hopes that private businesses will help reduce the mismatch between the country’s food grain storage capacity and growing production. The Food Minister told the Parliament today that the government is implementing the Private Entrepreneurs Guarantee (PEG) Scheme to augment the covered storage capacity through private entrepreneurs and other agencies. He said that the Food Corporation of India (FCI) will provide the guarantee to hire warehouses constructed under this scheme for a period of ten years that will ensure a fair return on investment.  

The minister said that while, a capacity of about 19.7 million tons has been approved for the construction in February 2013, and a capacity of 4.68 million tons has already been completed under the scheme. He also said that the construction of 2 million tons of storage capacity in silos under the PEG Scheme has also been approved, which means that an additional 6-7 million tons of storage space could be added this year.  

However, the country needs an additional 50 million tons of storage space to prevent grains from rotting in rains once again in 2013. The FCI has a total storage capacity (including hired facilities) of about 34 million tons (as of April 1, 2012), but that includes about 3.5 million tons of open space which can only be used for temporary storage of grains. Meanwhile, total food grain stocks in the central pool have reached a record 62.9 million tons as of March 1, 2013, the highest ever during this time of the year. Total stocks, including rice, wheat and other grains, stood at over 80 million tons in June 2012 and are expected to be higher this year due to increase in government procurement target.

Lack of storage facilities is one of the main reasons behind low prices of Indian rice in the international market. A representative of Rice Millers Association in the northern state of Punjab says, “It is better to sell rice at low prices instead of allowing it to rot due to lack of space.” Businessmen say that the government should include PEG scheme under the agriculture sector and allow them loans at low rates of interest to help them build new storage facilities.

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