India needs around 43m tonnes of additional warehousing and storage capacity if it wants to reduce the amount of food grain that is at risk of being damaged by poor conditions.
According to the Associated Chambers of Commerce and Industry of India (Assocham), up to one-third of the harvest is stored badly during the peak selling season.
"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,” the study said.
DS Rawat, secretary general of Assocham slammed India’s wastage issues. He said: “In India, 20% to 30% 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.
“Each grain bag is handled at least six times before it is finally opened for processing, which leads to higher storage and transportation charges, and also adds to wastage of food grain during transit and handling.
“Much needs to be done to built additional storage capacity, renovate existing warehouses and implement a robust negotiable warehouse receipt system to make available more funds to farm producers and simultaneously provide security to the lenders.”
Produce accounts for 12% of the overall warehouse market, which was worth over Rs22,800cr (US$3.8bn) in 2011-12, and is growing at a annual rate of 9%. Assocham has predicted it will cross the Rs35,000cr mark (US$5.8bn) in 2016-17.
“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 storage and refrigerated transport as it leads to wastage in fruit and vegetables,” the study continued.
“Warehousing is the backbone for developing trade and commerce. [It] plays a very crucial role in strengthening the agricultural supply chain, ensuring food security and price stabilisation,” said Rawat.
“Besides, it also solves the problem of glut and scarcity by maintaining uninterrupted supply of agricultural commodities in the off season.”
Another 35m tonnes in warehousing capacity is required for the current Five-year Plan to store major crops. Currently, there is 112m tonnes of public, private and co-operative warehousing in India, although around 70% of all warehousing space is owned by government agencies.
“The warehouses in India lack optimal size, adequate design, ventilation facilities, inventory management and storage systems 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,” the report added.
“There is intense competition amid the warehousing industry due to low entry barriers and high fragmentation,” the study added. “Besides, unorganised segments pose a great threat and competition to modern warehouse because of lesser overheads and competitive warehousing rate in the country.”