September 7, 2009

The Central Warehousing Corporation, working under the food ministry, plans to attract about Rs5,000 crore of investment from the private sector to build an additional storage capacity for 12.6 million tonnes of grain in 2009-10.

The tender will be issued this month by the Food Corporation of India (FCI), a senior government official said.

According to the plan, private companies will be given a five-year guarantee for the construction of warehouses and silos to raise the storage capacity in Punjab, Haryana and Himachal Pradesh, the official said.

The government would store the grain for five years after the construction is completed, to help secure business for the private sector for some time, the official added.

According to the FCI data, as much as 14 million tonnes of wheat procured in 2008-09 season has not been stored and is lying in the open in Punjab and Haryana.

Trade sources said the average cost of building a warehouse was about Rs4,000 per tonne capacity, so storage capacity for 12.6 million tonnes would need about Rs5,040 crore.

FCI's storage capacity is 27.55 million tonnes, while the Central Warehousing Corporation has a storage space of 10.5 million tonnes. But that is insufficient as grain production has increased steadily in the past decade, said farm experts.

The government also wants to phase out some old facilities, which are lacking in quality and requires higher costs.