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Upto 40% foodgrain stored unprofessionally due to 35 MT warehousing capacity shortage: Study
Owing to extreme dearth of about 35 million tonnes (MT) warehousing capacity together with massive food grain storage shortfall of about eight MT, about 30-40 per cent food grain is stored in an unprofessional manner during the peak marketing season in India, according to a recently concluded Assocham-Yes Bank joint study.

"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," highlighted the study titled 'Agri-Infrastructure in India: The Value Chain Perspective,' jointly conducted by The Associated Chambers of Commerce and Industry of India (Assocham) and Yes Bank.

"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," said D.S. Rawat, secretary general of Assocham while releasing the study.

"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," said Mr Rawat. "Much needs to be done to built additional storage capacity, renovate existing warehouses and implement a robust Negotiable Warehouse Receipt (NWR) system to make available more funds to farm producers and simultaneously provide security to the lenders."

Growing at a compounded annual growth rate (CAGR) of about nine per cent, the market size of warehouse was over Rs 22,800 crore in FY 11 which is expected to cross Rs 35,000 crore mark in FY 16 and only 12 per cent in this accounts for agro while the remaining is industrial warehousing.

While the warehousing space clocking a CAGR of about four per cent and which was about 1.52 billion square feet in FY 11 is expected to grow to 1.84 billion square feet till FY 16 and only 29 per cent of this accounts for agro while the remaining for industrial warehousing.

"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," suggested the Assocham-Yes Bank 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," said Mr Rawat. "Besides, it also solves the problem of glut and scarcity by maintaining uninterrupted supply of agricultural commodities in off season."

The warehousing capacity available in India, in public, co-operative and private sector is over 112 MT and another 35 MT of warehousing capacity is required during the 12th Five Year Plan for storing all major crops highlighting the huge demand-supply mismatch. "About 70 per cent of warehousing space is owned by government agencies."

"The 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," further noted the study.

"There is an intense competition amid warehousing industry due to low entry barriers (lower capital outlay and lesser regulatory environment) 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."

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