Gist of Kurukshetra February 2024 Issue: Food Storage Infrastructure

Kurukshetra Magazine is a vital source of study material for the UPSC IAS exam. It is a monthly magazine that gives information about important government schemes and programmes in various sectors. Kurukshetra is an authentic source of information for the UPSC Exam. Here, we provide the Gist of Kurukshetra, exclusively for the IAS Exam.

TABLE OF CONTENTS

1. Shaping sustainable food systems with storage infrastructure
2. Changing gears to meet present challenges
3. Mega Food Storage Plan
4. Making India the Food Basket of the World
5. ODOP - Providing the Framework for Value Chain Development

1. Shaping sustainable food systems with storage infrastructure

Introduction:

• A resilient storage infrastructure is crucial for ensuring agrifood systems’ sustainability, especially as India aims to become a developed nation by 2047.
• With a projected population of 1.64 billion by 2047, including nearly 0.82 billion in urban areas, strengthening storage infrastructure is essential to meet future food demands sustainably.

Government Initiatives:

• The Indian government has undertaken various initiatives to strengthen storage infrastructure, including approving the construction of the largest grain storage structure, which will be disseminated through cooperatives.
• Enhanced storage infrastructure mitigates post-harvest losses, maintains produce quality, and supports food buffer stock, ultimately benefiting farmers’ income and food security.

Current Agricultural Landscape:

• India has transitioned from being a food-deficit nation to a surplus one and is now a significant agricultural exporter, with food production increasing from 244 million tonnes in 2010-11 to 310 million tonnes in 2021-22.
• The country’s population has grown significantly since 1951 and is estimated to reach 164 crore by 2047, aligning with the vision of a developed nation by 2047 under Prime Minister Narendra Modi’s leadership.

Challenges and Opportunities:

• Food loss and waste pose significant challenges to food system sustainability, with around 14% of the world’s food lost post-harvest, valued at $400 billion per year.
• India faces substantial economic losses due to post-harvest losses of major crops and commodities, highlighting the need for sustainable storage infrastructure.

Impact of Storage Infrastructure:

• Scientific storage methods can reduce post-harvest losses to as low as 1%-2%, emphasizing the importance of modern storage infrastructure.
• Various storage structures, including traditional, improved, and modern, contribute to preserving grain quality and quantity.

Government Support and Investments:

• The Indian government supports storage infrastructure development through schemes like the Agriculture Infrastructure Fund (AIF), the Agricultural Marketing Infrastructure Scheme (AMI), and others.
• Initiatives like the Pradhan Mantri Garib Kalyan Anna Yojana (PMGKAY) aim to provide free food grains to millions of beneficiaries, supporting food security.

Role in Achieving Sustainable Development Goals (SDGs):

• Food grain storage infrastructure directly contributes to achieving SDG targets, particularly zero hunger and sustainable consumption and production.
• Increased investment in the modernization of warehousing, logistics, cold chain, and food processing can facilitate India’s development goals and SDG targets.

Way Forward:

• Modernizing post-harvest storage infrastructure, improving warehousing capacity, and promoting private sector participation are essential steps.
• Decentralized local storage systems can reduce food grain wastage, strengthen food security, and prevent distress sales by farmers.
• Investments in modernising warehousing, logistics, cold chain, and integrated value chain development are critical for achieving development goals and SDG targets.

Conclusion:

• Strengthening storage infrastructure is vital for ensuring food security, reducing post-harvest losses, and achieving sustainable development goals in India.
• Government initiatives, private sector participation, and investments in modernization are key to shaping sustainable food systems for future generations.

2. Changing gears to meet present challenges

Introduction:

• The article highlights the evolving role of warehouses in supply chains.
• Discusses the challenges faced by farmers post-harvest, particularly liquidity issues.

Warehouse Receipt System (WRS) – Overview:

• Explains the concept of Warehouse Receipts and their importance.
• Outlines the participants in a good WRS: depositors, warehousemen, financial institutions, regulators, etc.
• Emphasizes the need for negotiable warehouse receipts (NWR) to facilitate finance against stored goods.

Challenges Faced by Farmers:

• Farmers encounter liquidity problems post-harvest, leading to distress sales.
• Despite increased credit flow in agriculture, post-harvest finance remains low.
• Immediate selling after harvest results in reduced profits for farmers.

Role of Negotiable Warehouse Receipts (NWRs):

• NWRs enable farmers to obtain loans from banks using stored goods as collateral.
• Lack of negotiability and trust in warehouse receipts hindered their usage in finance.
• Introducing NWRs was recommended to enhance confidence in warehouse receipts.

Warehouse Receipt System (WRS) Participants:

• Depositor: Brings goods to the warehouse, expecting benefits like reduced losses and access to credit.
• Warehouseman: Receives, tests, and stores goods, ensuring their safety and quality.
• Financial Institutions: Provide loans against warehouse receipts, marking lien over NWRs.
• Insurance Companies: Offer coverage for goods stored in warehouses.
• Regulator: Oversees WRS activities, ensures compliance, and resolves disputes.

Warehousing (Development & Regulation) Act, 2007:

• Establishment of the Warehousing Development and Regulatory Authority (WDRA) to regulate warehouse operations.
• Compulsory registration of warehouses issuing NWRs with WDRA.
• Defined liabilities, duties, and mandatory particulars of warehouse receipts.
• Provided a legal framework for NWRs, making them prime instruments for trade and finance.

Achievements of WDRA:

• Over 5,000 registered warehouses as of December 2023.
• Increased loaning against electronic NWRs, with notable initiatives by banks like State Bank of India.
• WDRA’s regulation enhances trust in warehouse receipts and encourages the professionalization of the warehouse industry.

Conclusion:

• WDRA’s regulation has established an effective WRS based on NWRs in India.
• Benefits include reduced post-harvest losses, improved price realization for farmers, and enhanced efficiency in warehouse operations.
• Challenges remain, including the need for better infrastructure and increased warehouse registration with WDRA.
• Overall, WDRA’s regulatory ecosystem contributes to a healthier agricultural sector and business climate.

3. Mega Food Storage Plan

Introduction:

• The Ministry of Cooperation approved a groundbreaking plan for integrated grain storage facilities through Primary Agricultural Credit Societies (PACS) across India.
• Highlights the significance of the plan in addressing post-harvest losses and ensuring food security.

Current Storage Challenges:

• India’s food grain storage capacity is insufficient, accommodating only 47% of total production, leading to significant post-harvest losses.
• Poor storage infrastructure and techniques contribute to losses ranging from 10-34% for various food crops, with regional disparities in storage capacity.

Existing Government Efforts:

• Multiple government agencies are involved in grain management, but the results are unsatisfactory.
• Inadequate storage facilities force some grains to be stored in the open, resulting in substantial damage.

New Mega Food Storage Plan:

• Aims to enhance grain storage capacity by 70 MMT in the cooperative sector, utilizing a hub and spoke model through PACS.
• Integrated facilities to include custom hiring centres, procurement centres, primary processing units, and storage sheds.
• Convergence of existing schemes from various ministries to fund the project, totalling approximately Rs. 1 lakh crore.

Implementation and Challenges:

• A pilot project was initiated in 24 PACS across 24 states/UTs, with ongoing construction and detailed project reports underway.
• Challenges include potential conflict with Farmer Producer Organisations (FPOs), infrastructure management, food quality maintenance, and a multiplicity of institutions.

Possible Solutions:

• Consider implementation through Public-Private Partnership or FPOs for better governance.
• Prioritize modernization of existing storage infrastructure for both food grains and perishables.
• Ensure adequate storage facilities for high-value crops to support the goal of doubling farmers’ income.

Conclusion:

• Despite challenges, the mega food storage plan holds promise in revolutionizing food storage infrastructure in India.
• Swift and judicious implementation is essential to overcome hurdles and translate the vision into reality, aligning with the goal of enhancing food security and empowering farmers.

4. Making India the Food Basket of the World

Introduction:

• India has the potential to become the largest food supplier globally, leveraging its cultivable land, diverse seasons, and robust agribusiness system.
• The global food shortage crisis highlights the urgency for India to step up as a major food supplier, addressing hunger and ensuring remunerative prices for farmers.

India’s Readiness and Intent:

• Prime Minister Narendra Modi’s commitment to offering India’s food stocks to the world underscores the nation’s readiness to step into this role.
• Significant contracts for food grain exports have already been signed, with projections of another bumper harvest, indicating India’s capacity for large-scale food production.

Government Initiatives and Policies:

• Investor-friendly policies and initiatives like the agri-export policy, infrastructure development, and establishment of district-level hubs and mega food parks have propelled India’s food processing capacity.
• The food processing industry aims to double its contribution to GDP by 2030, with substantial growth anticipated in the coming years.

Strengths for Global Food Supply:

• Millets, being rich in nutrients and resilient to climate change, present a significant opportunity for India to contribute to global food security.
• India’s dominance in millet production, coupled with government support and international recognition, positions it as a key player in addressing food scarcity.

Key Areas for Focus:

• The food processing industry plays a crucial role in creating value-added products and connecting farmers with global markets, with substantial growth potential.
• Strengthening the food supply chain, including demand forecasting, data integration, and technology adoption, is imperative for efficient distribution and market penetration.
• Packaging standards and food safety measures are critical for ensuring quality and meeting stringent international standards, enabling India’s access to global markets.

Conclusion:

• India’s vast agricultural resources and growing food processing capabilities position it as a potential leader in global food supply.
• Addressing supply chain inefficiencies, investing in infrastructure and technology, and adhering to international standards are essential steps towards realizing this potential.
• By transforming surplus produce into value-added products and aggressively tapping into domestic and international markets, India can emerge as the world’s food basket, contributing to global food security and economic growth.

5. ODOP – Providing the Framework for Value Chain Development

Introduction:

• ODOP intervention facilitates the aggregation of sellers on e-commerce platforms, enhancing visibility for small businesses and farmers.
• The scheme aims to foster inclusive development and harness export potential, aligning with the Atma Nirbhar Bharat initiative.

PMFME Initiative:

• Launched under Aatmanirbhar Bharat, the PMFME Scheme supports micro-food processing enterprises with technical, financial, and business assistance.
• ODOP concept under PMFME fosters integrated development of local economies and supports over 2 lakh enterprises.

Progress of ODOP Scheme:

• The government approved 137 unique products in 713 districts across 35 States and UTs, laying the foundation for value chain development.
• FPOS, SHGs, and Cooperatives receive support for market study, product standardization, packaging, warehousing, and marketing under ODOP.

Loan Disbursement and Top Performing States:

• 70,286 loans sanctioned under credit-linked support, with Maharashtra, Bihar, Tamil Nadu, Uttar Pradesh, and Telangana leading in performance.
• Individual micro-enterprises receive capital subsidies and credit linkage, while clusters and groups get support for common infrastructure.

Value Chain Development and Marketing Support:

• ODOP scheme promotes common infrastructure facilities, cluster development, value addition, and branding/marketing initiatives.
• Institutional architecture ensures effective planning, execution, and monitoring at district, state, and national levels.

Prospects and Benefits of ODOP:

• Local and community development, preservation of local enterprises, skilling/training, and promotion of exports contribute to inclusive growth.
• Digital ODOP GIS map facilitates resource identification and visualization, indicating growth potential and expansion opportunities.

Challenges and Way Forward:

• Challenges include uneven infrastructure distribution, access to financial and market linkages, and underutilization of cold chain infrastructure.
• ODOP’s bottom-up approach and focus on integrated development garner accolades, aiming for transformation and economic growth.

Conclusion:

• ODOP, as a flagship initiative, empowers districts, generates local employment, fosters entrepreneurship, and contributes to India’s self-reliance.
• Effective implementation of ODOP with systematic marketing, value addition, and infrastructure development aligns with the vision of Aatmanirbhar Bharat, strengthening India’s economy.