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About 35 MT Food Grain Kept Unprofessionally, Says Assocham

17 April 2014

INDIA - Due to shortage of warehousing facilities over 35 million tonnes or 30 per cent to 35 per cent of food grain is stored in an unprofessional manner during the peak marketing season in India, the Associated Chambers of Commerce and Industry of India (Assocham) said in a study on April 9.

The study titled Agri-Infrastructure in India: The Value Chain Perspective, jointly conducted by Assocham and Yes Bank said: “There is an urgent need to develop a strong warehousing system equipped with modern and scientific storage facilities like warehouses, silos, silo bags and others as the grain storage capacity in India has not been keeping pace with the marketable surplus.”

As per the study, market size of warehouse has been growing at a compounded annual growth rate (CAGR) of about nine per cent and is expected to grow at $5.81 billion in fiscal year 2015-16, as compared to $3.78 billion in fiscal year 2011-12.

In India, around 20-30 per cent of total food grain harvest is wasted due to inadequate storage capacity, regional imbalance in warehouses, lack of adequate scientific storage and inefficient logistic management, D.S. Rawat, secretary general, Assocham said while releasing the study.

“Warehousing is the backbone for developing trade & commerce and agro processing industry as it plays a very crucial role in strengthening agricultural supply chain, ensuring food security and price stabilization. It also solves the problem of glut and scarcity by maintaining uninterrupted supply of agricultural commodities in off season,” Rawat said.

While the warehousing space clocking a CAGR of about four per cent, it is expected to grow to 1.84 billion square feet in fiscal year 2015-16, which was about 1.52 billion square feet in fiscal year 2011-12.

“India needs to recalibrate its strategy to mitigate the challenges of high food grain wastage due to lack of scientific storage facilities and high inflation due to lack of cold chain infrastructure like cold storages and refrigerated transport as it leads to wastages in fruit and vegetables,” the study suggested.

The study also cited that warehouses in India lack in optimal size, adequate design, ventilation facility, inventory management and storage system as they have been built following the traditional norms and without proper specification and even some of the modern warehouses do not meet international standards.

“There is an intense competition amid warehousing industry due to low entry barriers (lower capital outlay and lesser regulatory environment) and high fragmentation. Besides, unorganised segments pose a great threat and competition to modern warehouse because of lesser overheads and competitive warehousing rate in the country,” the study stressed.

The warehousing capacity available in India, in public, co-operative and private sector is over 112 million tonnes of which 70 per cent of warehousing space is owned by government agencies, the study said.

As per an estimate another 35 million tonnes of warehousing capacity is required during the 12th Five Year Plan (2012-2017) for storing all major crops highlighting the huge demand-supply mismatch.

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