The government has told Rajya Sabha that the Food Corporation of India is operating a total of 2199 warehouses (Top states: Punjab> Haryana> Uttar Pradesh), owned or hired across India, stating that augmentation of capacity is a continuous process.
FOOD CORPORATION OF INDIA
- The Food Corporation of India mint of India. It is under the ownership of the Ministry of consumer affairs, food and public distribution.
- It was formed by the enactment of the Food Corporation Act, 1964 by the Parliament of India.
Reform agendas by Ministry of consumer affairs, food and public distribution
The Ministry of consumer affairs, food and public distribution give five sutras for progress of FCI.
- Change the public perception of FCI from inefficient and corrupt to dynamic, inclusive and honest.
- Focus on integrating into end to end tech solutions right from procurement to delivery to achieve operational efficiency and leakage redistribution-reduce PDF response time, beneficiary tracking etc.
- Establish a grievance redressal mechanism to react rapidly to farmer/farmer producer organisations in distress. Reaching out to farmers through ‘Jan Jagrukta’ programs at grassroot level to spread awareness.
- Plan for modern infrastructure and logistics. Upgrade warehouses to international standards. Improve storage capacity for growing need-power backup, CCTV, row bus network facility.
- Adopt the best global practices making India a food hub.
ISSUES RELATED TO FCI
- Open ended procurement: FCI conducts open ended procurement i.e the government would buy at minimum support price any quantity of wheat and rice from any farmer who comes forward to sell. Thus, FCI has huge green stocks which far exceeds its buffer stock norms.
- Optimisation issue: FCI procures, stores and then distributes foodgrains under the public distribution system scheme. It involves logistics cost for transportation of commodities from warehouses to the PDS shops, maximum leakages happen during this process.
- Infrastructural challenges: A number of warehouses still follow outdated methods of storage.
- The grain is packed in jute sacks and are piled up and covered with plastic sheets to protect them from rains, this practice is particularly done by warehouses storing wheat in the northern parts of the country.
- This is a labour intensive method and also involves time, the wastage of food is also high.
Restructuring of FCI: Shanta Kumar Committee Recommendations
The committee was set up in 2014 to suggest restructuring of FCI with a view to improve its operational efficiency and financial management.
Procurement related measures
- It recommended that FCI should hand over all procurement operations of wheat, paddy and rice to states that have gained sufficient experience in this regard and have created reasonable infrastructure for the procurement.
Negotiable warehouse receipt system
- Under this system, farmers can deposit their produce to the registered warehouses and get 80% advance from banks against their produce valued at MSP.
- They can sell later when they feel prices are good for them, it would bring back the private sector, significantly reduce the cost of storage and be more compatible with a market economy.
- The government through FCI and warehousing development regulatory authority can encourage building of the warehouses with better technology and keep online track of grain stocks with them on daily/weekly basis.
Revisit the MSP policy
- It recommended that pulses and oilseeds deserve priority and the government must provide better support operations for them.
On public distribution system
- Centre should have a Second look at the national Food security act, given that leakages in the PDS range from 40 to 50%.
- There is a need to put the list of beneficiaries online and to set up vigilance committees to check leakages from the PDS.
- Operations to Central Warehousing Corporation, State warehousing Corporation, private sector and even state governments that are building silos through the private sector on state lands.
- Phase out covered and plinth (CAP) storage and introduce silo bag technology.
- FCI has to become a dynamic organisation estimating demand and supply. It means it has to create a space in its warehouses anticipating supply in the coming season. It needs to understand the impact of offloading its stock in domestic and international markets.
- As the largest hoarder, it has to move in such a manner that it can keep a check on prices of coarse grains while maintaining the farmer's interest.
- FCI can play a role in the international market, as the largest player can move markets. It would help India in gaining a better grip while negotiating in international forums of bilateral relationships. FCI can be the muscle that India has rarely used in the international commodity markets.
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