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Procurement
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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. o Thus, the central government and FCI should assist the state governments in creation of adequate infrastructure for effective procurement.
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Decentralised procurement
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- Under the decentralised procurement scheme, the state governments utilise the foodgrains procured locally from within the state for distribution under various schemes. The scheme:
- reduces the overall transportation cost
- encourages procurement in non-traditional states, and
- enables procurement of local foodgrains, which may be more suited to local taste.
- However, even after 23 years of the inception of the scheme, it has been undertaken by only eight states in case of wheat, and 15 states in case of rice.
- Thus, the Department of Food and Public Distribution should encourage the adoption of the scheme in non-traditional states.
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Refusing procurement at centres
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- The lower staff posted at procurement centres sometimes refuse to procure citing non bonafide technical reasons, such as moisture content in the produce. This causes great hardships for the farmers, thus leading to distress sales.
- Thus, it should be ensured that foodgrains are not rejected on flimsy grounds if they conform to the Fair Average Quality norms.
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Storage capacity
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- 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 underutilised.
- Thus, it should be seen that FCI maximizes utilisation of owned facilities before hiring. Hiring should be done only if absolutely necessary to minimise the cost incurred in paying rent
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Mismatch between production and storage capacity
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- At present, India has a foodgrain storage capacity of 145 million metric tonnes (MMT) against the total food production of 311 MMT—leaving a gap of 166 MMT.
- In the absence of sufficient storage facilities, foodgrains are sometimes stored in the Student Notes: open, which results in damage.
- India has a storage capacity of 47 per cent of its total foodgrains production. At the regional level, only a few southern states have the storage capacity of 90 per cent and above. In northern states like Uttar Pradesh and Bihar, it is below 50 per cent
- For this, the Union Cabinet recently approved the constitution of an Inter-Ministerial Committee (IMC) to facilitate the “world’s largest grain storage plan in the cooperative sector”.
- Under this plan, the Ministry of Cooperation aims to set up a network of integrated grain storage facilities through Primary Agricultural Credit Societies (PACS) across the country. There are more than 1,00,000 PACS spread across the country with a huge member base of more than 13 crore farmers.
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Unscientific storage and inefficient management
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- Often the stock stored in the warehouses remains in storage for more than its shelf life and such long storage makes grains prone to rodents, moisture, birds, and pests.
- About 80% of handling and warehousing facilities are not mechanized and traditional manual methods for loading, unloading, and handling food grains and other commodities are used.
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Open ended Procurement
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- It means that FCI buys as much grains as the farmers can sell. Not only it strains the already burdened godowns, it also distorts the food grains market.
- It also leads to FCI’s mounting debts. As on April 30, 2023 the total external debt stands at Rs 44,203 crore.
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Excess stock
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- One of the key challenges for FCI has been to carry buffer stocks way in excess of buffer stocking norms.
- The underlying reasons for this include- export bans, open ended procurement and no pro-active liquidation policy.
- Excess stocks piling leads to the financing, storage and other logistics costs going up.
- Further, it forces the FCI to routinely dump the excess grains in the open market and such transactions often takes place at a price much lower than the procurement cost, causing massive losses to FCI.
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