India’s Painful Problem of Plenty…

Most of you may know that India produces more food than we can consume. In fact, India has been self sufficient in food for at least the last three decades, having “achieved self- sufficiency in food production in the late 1970s (1)”. And yet hunger in India remains at alarming levels. More children remain malnourished in India than any part of the world (almost 40% of the world’s total according to some estimates).

What most of you may not know is that “..India wastes a quantity of wheat equivalent to the entire production of Australia every year, of which 21 million tonnes perishes every year due to a lack of inadequate storage and distribution (2).

Worse, “..up to 40 percent of the country’s food harvest” rots before it gets to the market, thanks to inadequate cold storage facilities and transport bottlenecks.

A report from 2008 in ToI highlighted the scale of mismanagement and callous neglect of food storage:  “Over 10 lakh tonnes of foodgrains worth several hundred crores of rupees, which could have fed over one crore hungry people for a year, were damaged in..(FCI) godowns during the last one decade (between 1997 – 2007).”

Shockingly, “Rs 2.59 crore was spent just to dispose off the rotten foodgrains”.  

Responding to an RTI query last year, FCI admitted that “..over 17,500 tonnes of foodgrain lying in its godowns got destroyed in the last three years (alone)”.

This abysmal state of affairs has seen foodgrains being stored in classrooms, grains being burnt and stocks being infested with worms. A pernicious side-effect of rotten grains in godowns is the sight of good quality grains being left in the open since valuable space has been taken up by grains unfit for consumption.

Ironically, even as food production has soared in the last few years, storage capacity has actually decreased. This report by Kamayani Mahabal mentions how Government owned storage capacity actually fell to 32.1 million tonnes in 2009 from 36.7 million tonnes in 2004. This was UPA-I.

UPA-II was not much of an improvement. While “..total foodgrains stock in the Central Pool recorded an increase of 45.8 million tonnes between 2006-07 and 2011-12; FCI increased its storage space through hiring or owned space only to the extent of 8.4 million tonnes (18 percent)…Its owned storage capacity increased by mere 0.4 million tonnes during the period” (3).

What’s worse, even the existing capacity – woefully inadequate as it was – was not being utilised fully. “The auditor (CAG) observed that utilization of existing storage capacity in various states and union territories was less than 75% in the majority of the months between 2006-07 and 2011-12.” 

In case of fruits and vegetables – items that perish easily – lack of proper storage makes the situation worse.

An ASSOCHAM Study from 2013 estimated that “at least 30% of fruits and vegetables were rendered unfit for consumption due to spoilage after harvesting, negligent attitudes, absence of food processing units and unavailability of modern cold storages”. The study also noted that barely 22% of produced fruits and vegetables reach the wholesale market in India.

Dr JP Narayan of LokSatta has noted that “Post-harvest losses of perishable commodities exceeds Rs 100,000 crores or Rs one trillion per annum”. 

I can go on and on..but I think you have got the point..

So what can be done?

How do we prevent food from rotting? How do we ensure it reaches the people who need it the most? How do we leverage the enormously fertile and productive land mass that India is fortunate to be blessed with?

There are at least two areas which need to be tackled as a matter of urgency. In fact, I think they should be considered matters of national priority. The first is a  massive increase in covered storage capacity – at least doubling the existing storage, ideally more than that so enough buffer stocks can be maintained.

At less than 50m tonnes, India’s current covered storage capacity is woefully inadequate to handle even a normal monsoon. In July 2012, Ashok Gulati, Chairman of the Commission of Agricultural Costs & Prices (CACP) noted that “Grain stocks with state agencies are likely to cross 75 million tonnes some time in June 2012, while covered capacity to store is less than 50 million tonnes”.

In April 2012, an internal FCI note accessed by ToI revealed that “By June, when monsoon begins to lash across the country, 231.82 lakh tonnes (23.2 million tonnes) of wheat will be lying under the sun on the plinths in the three states (Punjab, Haryana and MP)…

It is clear that FCI and the state agencies will be faced with unprecedented problems of shortage of storage capacity resulting in large stock of wheat in CAP (kept in open plinths covered with tarpaulin) in Punjab, Haryana and Madhya Pradesh.”

The report went on to warn, “…substantial quantity may have to be stored in unscientific plinths”.

In October 2013, the Minister for Food and Public Distribution was quoted as saying we need 85 million tonnes of storage capacity by 2014 (in light of the Food Security Bill) but the current availability is only 78 million tonnes.

A July 2013 report noted that India needed to increase its present storage capacity by at least 70% to maintain buffer stocks to ease price fluctuations. “But (to add this capacity) assuming no change in the pace at which India has added storage capacity in the recent past, it will take 19 years.”

In a report submitted to Parliament in May last year, the CAG noted how “..nearly 50 percent of the foodgrain does not have any storage space.”

Increasing storage capacity must therefore become a national priority. But that alone will not be enough. Alongside, we need a complete overhaul of the public distribution network (PDS) for food.

Just how bad is the situation?

“(a)..recent study…shows that 67% of the wheat meant to reach the poor end(s) up missing the target, being pilfered or sold on the open market en route.” This is Government of India’s Chief Economic Adviser Kaushik Basu. On record.

To most Indians, this is not news. What might be news is how “..110.6 million kilograms of wheat and rice meant for India’s poor was transferred from rail stations in Sitapur district (in UP) to Bangladesh..” and in some transactions, to Nepal. This was just over a three-year period (2004-2007). 

Dr JP Narayan estimates “nearly 40% of the food grains in PDS are ‘recycled’ because of price distortion, and go back for sale to FCI”.

Thanks to this supremely inefficient and leaky PDS, the government incurs costs of Rs 28 per kg to distribute rice at Rs 5/kg! This candid (and public) admission came from the Minister for Food and Public Distribution himself.

In an article for ToI last year, the Chairman, CACP, while highlighting the need to modernise logistics, mentioned how the situation is made worse by “(an) acute shortage of railway wagons at the time when grain needs to move from one state to another.” This shortage of wagons – which was in the order of 10% in 2006-2007 - had by 2011-12, shot up to 17 percent. Inability to move large stocks of grains rapidly has the direct consequence of putting enormous strain on the storage capacity (inadequate, as it is) and compounds the problem of rotting grains.

A focus on these two dimensions – increase in capacity and overhaul of logistics – can transform the situation and help get us out of the current crisis. Longer term, more needs to be done.

Such as freeing up exports to help reduce stockpiles in case of a bumper harvest, freeing up retail trade and removing barriers & levies on food transport.

But what would help most is the government “getting out” of agriculture.

Getting out of controlling  markets (almost 90% of grain trade today is under the control of government). Getting out of practices such as obligatory procurement (did you know that “Under the FCI Act, the government is obliged to buy all the wheat, whatever the quality, that comes to the mandis..”?).

And abolishing price controls. These are things that would really help – not just farmers but consumers too. This is the only way to avoid a worse situation down the line. And unless there is prompt action, we will continue to witness the tragedy of farmers committing suicides, grains rotting in the rain and perversion of the public distribution system.

Hopefully somebody is listening. Somebody who can take bold and decisive steps to solve India’s grain storage crisis. That would be true “Bharat Nirman“.  Jai Hind, Jai Bharat!

Related Posts: “Of Subsidies and Food Security“, on FDI in Retail and the presentation on “Rotting Food Grains and Flawed Policies”

This post has been cross-posted as a 2-part post over at ToI. 

Related article:  Granaries overflowing, Food dept’s SOS to MEA: Send wheat, rice as aid to deserving countries

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