Relevance: GS-3: Indian Economy, mobilization of resources, issues of buffer stocks and food security.

Relevance: GS-2: Government policies and interventions for development in various sectors

Key Phrases: State of Food Security and Nutrition in the World, food insecurity, post-harvest losses, Agri warehousing, Food Corporation of India, Central Warehousing Corporation, State Warehousing Corporation, warehouse receipts, private participation.

Why in News?

• The idea of logistic parks and unified logistics interface platform announced in Budget 2022 needs execution beyond policy making.

Context:

• In July 2021, the State of Food Security and Nutrition in the World (SOFI) report revealed that food insecurity in India increased by 6.8 percentage points during 2018-2020. Though the mentioned period was one when the Covid-19 pandemic was spreading across the country and a national lockdown had been announced, India’s population has been facing food insecurity for decades now. The same report reveals that over six crore people became prey to food insecurity during 2014-2019.
• The primary solution for this issue seems to be an increase in crop production. However, it is imperative to realise that improved harvest quantity will remain insignificant unless there is a mitigation strategy to reduce post-harvest losses across the country. In this direction, one of the most pragmatic and effective solutions is efficient warehousing.
• India has a total Agri warehousing capacity of around 91 MMT at present to store and conserve such large quantities with state agencies owning 41% of the capacity and the balance distributed among private entrepreneurs, cooperative societies, farmers, etc.
• However, these government agencies use 66% (60 MMT) of India’s total agri storage capacity which also includes hired capacity of 23 MMT. The total state-owned storage capacity of 37 MMT is held through three public sector agencies viz. Food Corporation of India (FCI), Central Warehousing Corporation (CWC) and State Warehousing Corporation (SWC).

Understanding the need:

• During healthy harvests, the smallholder farmers, who comprise nearly 70 per cent of India’s agricultural strength, employ traditional home storage methods. Traditional storage is not immune to natural hurdles such as moisture, temperature, rodents, etc, and ultimately, agricultural produce can only last for a short span of time. Consequently, the farmer has to compromise and sell his produce at low prices, settle for meagre profits and continue farming with insufficient money to buy better seeds, fertilizers, and equipment.

Benefit of Efficient Warehousing

The efficient warehousing is beneficial in following way:

• Firstly, warehouse receipts have revolutionized financing for small-scale farmers. Functioning under the ambit of Commodity Based Financing (CBF), various RBI-regulated Banks and NBFCs have simplified the loan process through new collateral avenues. Instead of land or machinery, farmers can store their produce in dedicated warehouses and receive storage receipts against them, which can be used by Banks/NBFCs to provide immediate financial assistance.
• Secondly, warehouse storage empowers farmers to hold their produce. The improved and scientifically managed warehousing spaces provided by private Warehouse Service Providers (WSP) coupled with electronic platforms for sale and purchase enables the warehouse depositors to realize better prices for their produce. This directly translates into improved farmer income and hence, food security. Furthermore, it is as a replacement for home storage techniques, which will result in minimizing post-harvest losses.
• Lastly, warehousing generates employment. Albeit the aim is maximum automation, the system needs manpower to constantly monitor the management systems, implement an efficient network for commodity transportation, and maintain on-ground support for awareness. For each mentioned branch, local village community members could be the ideal candidates, and the resultant financial empowerment will enhance food security.

Way forward:

• Focus on private participation: Increasing demand for storage space, need for efficient handling of produce and supporting regulations have encouraged private players to make investments in the warehousing sector. Companies have adopted different models to build a profitable business. Private players are also focusing on providing premium warehousing services by building sophisticated large-scale storage spaces. End-to-end logistics service providers have also started tapping the opportunities created by the government in the agri-warehousing segment.
• Focus on scientific storage methods: In order to modernise the storage of wheat and rice, FCI as well as other government agencies are undertaking the construction of steel silos. Storage of grains in these silos offers a host of benefits over conventional storage techniques.
• Online depot system: FCI has implemented the online depot system to automate, facilitate and effectively manage its depot-level operations. This will help in tracking and controlling the procurement, storage and movement of foodgrains within a depot by managing all associated transactions such as the lorry weighbridge, quality control, storage/transit loss, and gunny inventory. Real-time information provides accurate inventory and improves visibility on quantity, location and age of the available stock. The online depot system has also been adopted by CWC.
• The idea of Logistic Parks and Unified Logistics Interface Platform announced in Budget 2022 need proper execution for efficient warehousing logistics. Both announcements are a step in the right direction, but the onus is on the combination of government and private players to ensure that policy making yields ground results. Undoubtedly, efficient warehousing is a bipartite solution that improves food security and simultaneously, enables agricultural growth for small-scale farmers.

Source: The Hindu BL

Mains Question:

Q. “Warehousing plays a very vital role in promoting agriculture marketing, rural banking and financing and ensuring Food Security in the county”. Critically analyse the statement.