October 5, 2010

India's capacity for grain storage reaching overflow

India's supply of grain silos and godowns - which have a maximum storage capacity of 56.9 million tonnes - are overflowing due to the government's current stock of 57.9 million tonnes of wheat and grains.

According to agriculture minister Sharad Pawar, the period of 2010-11 could end up as the best year for India in terms of crop output.

The agriculture ministry's initial estimates suggest that grain output in 2010-11 would be around 80.41 million tonnes, US$6 more than last year. Even if the government procures 20% of the produce, the problem is set to intensify. During the 2010-11 rabi season, government agencies had procured 22.5 million tonnes of wheat, around 87% of the total arrival in the mandis.

The Indian government has turned into the biggest hoarder of food grains in the country, driving prices up in the open market and affecting the nation's food security. While there are various options available to the government - from selling in the open market at low rates to exports and increasing the stock limit for private players - the government has yet to finalise its plans.

Between March 2007 and March 2010, the overall storage capacity, including owned and hired facilities of three government agencies, had increased by 10%. A major portion of this increase is due to hired work, as the government agencies have failed to create their own capacities.