Tuesday, July 27, 2010

Abandoning godowns, FCI opts for the open

FCI won't pay 80 paise per sq ft for covered storage, but will pay almost twice that to let grains rot outside
Chandigarh: Hemant Gupta's 30,000-tonne capacity godown for storing foodgrain is one of the largest in Ferozepur, Punjab.

In 1978, the Food Corporation of India (FCI) hired it on a monthly rent of Rs75,000, or 50 paise per sq. ft—eventually raised to 80 paise per sq. ft. In 2004, Gupta says, FCI abruptly vacated his godown and stocked the grains in the open nearby.

"See the rot within FCI," says an exasperated Gupta. "They won't pay me 80 paise for keeping their foodgrains under the roof, but (they are) allowing (the) foodgrains to perish in the open, for which they are paying Rs1.44 per sq.ft."

Open storage means buying two-three times more gunny bags, wooden crates and tarpaulin sheets than what's needed in a covered facility, and fumigation. "It's plain corruption," Gupta says.

"The government (is) desperately seeking investment, even eyeing foreign investors...but who will put in money if this is the approach?" asks Gupta.

Thirty-two years ago, FCI hired Colonel T.S. Dhillon's 7,500-tonne capacity godown in Chabal, Amritsar, at a monthly rent of Rs15,000, or 40 paise per sq. ft.

Today, he gets 67 paise per sq. ft, or Rs25,125 a month, far below FCI's going rate of Rs2.40-2.50 per sq. ft for godowns set up in 2001-02.

"There is no clear policy. Our godowns are as good as others, but we get four times less rates. Are we that illiterate a nation? Nobody could have dared to let a single grain rot in China," says Dhillon, one of the oldest people in this business.

"This is definitely an issue," admits Punjab's FCI senior regional manager Nilkanth S. Avhad. "We, too, feel there has to be a uniform policy." The matter is being discussed at the highest level so owners of older godowns get fair rates, he adds.

In Punjab, Central and state procurement agencies are accused of whimsical and indifferent functioning when it comes to storing foodgrains. While India reworks its food security Bill to ensure sufficient food for all, wastage of foodgrains during storage and transit or on account of pilferage and theft remains a major issue.

Over the past four years, an estimated 600,000 tonnes of foodgrains have been lost due to poor storage, and around 675,000 tonnes in transit.

In Punjab alone, 48,315 tonnes of wheat, procured over the last three years, have been declared unfit for humans, ironically by FCI.

"Nobody's bothered. In fact, FCI has always promoted open plinth culture," says Sandeep Gilhotra, president of the Punjab Godown Owners' Association. Gilhotra, who himself owns an open storage area with a capacity of 250,000 tonnes in Fazilka, says FCI officers encourage foodgrain storage in the open.

He is among 128 investors who put up godowns with a collective capacity of 2.5 million tonnes (mt) in 2001-02 for the Punjab State Grains Procurement Corp. Ltd, which took the spaces on rent on behalf of FCI. These investors are still better off than Gupta and Dhillon as they get a higher monthly rent from FCI.

Some of the older investors are considering a rather harsh route: demolishing their godowns. "I told them (FCI officials)...take your stocks out and allow me to demolish my godown so that I could then rent out just the land and still earn more rent," says Dhillon.

Over the past 60 years, India has created 80.3 mt of covered storage facilities, but still has 17.8 mt of foodgrain lying in the open. According to Union food minister Sharad Pawar, India urgently needs an additional capacity of another 14 mt.

"This would, however, require an investment of Rs4,000 crore. Since it's a big amount, the government is doing it through the public-private partnership model," said a top FCI official, who didn't want to be named. "We expect to create 150 lakh tonnes (15 mt) of storage facility in the next two years."

Of this, Punjab alone would be creating about 7 mt of storage facilities by next year, said the state's finance minister, Manpreet Singh Badal. "There's no point getting into a blame game. What we need is to set up more silos in Punjab like the one by the Adani group's 2 lakh-tonne (200,000 tonne) facility in Moga. We've to look ahead."

No comments: