Centre to offload 65 lakh tonnes of wheat in open market

The decision will help Punjab tide over shortfall in storage capacity

As Punjab grapples with high foodgrains procurement amid a shortfall in storage capacity, the Centre has decided to offload 65 lakh tonnes of wheat in the open market.

The State will create an additional storage space for 40 lakh tonnes at eight locations by March 2013. Each godown can store 50,000 tonnes of wheat that will be procured in the coming rabi season.

In a relief to the State, the Centre has decided that of the 27 lakh tonnes to be offloaded first under the Open Market Sale Scheme before February 2013, Punjab will release one lakh tonnes at a reserve price of Rs.1,484 a quintal (against the minimum support price of Rs.1,285).

The State, which is at the end of its paddy procurement season, is grappling with a shortage of storage space. As a result, 108 lakh tonnes of the 205 lakh tonnes of foodgrains is kept under the cap and plinth (CAP) storage. On November 1, the State had 192 lakh tonnes of rice and wheat in its godowns, despite the movement of 15 lakh tonnes every month.

Preparations are under way to create an additional storage capacity of 40 lakh tonnes under the Private Entrepreneur Godown Scheme. The Food Corporation of India (FCI) gives a 10-year guarantee for full occupancy of warehouses to help the investor break even.

FCI Deputy General Manager A.S. Arunachalam told visiting journalists here that of the 51-lakh tonne capacity sanctioned for Punjab, storage had already been created for nine lakh tonnes.

Modern silos

Though the FCI owned four silos in the State capable of handling 1.2 lakh tonnes, bulk handling in silos was more expensive than the traditional system, he said. Even so, the FCI planned to build modern silos in the State with a capacity of 4 lakh tonnes.

Punjab has two more state-of-the-art silos, at Kaithal and Moga, owned and run by Adani Agri Logistics under a public-private partnership programme. The government pays an annual rent of Rs. 45 crore for each. Every year, about 2 lakh tonnes of wheat is handled at these silos, which are sited next to rail sidings. However, they do not handle rice, a sensitive produce with a lower shelf-life. The Kaithal silo, for instance, has some wheat stocks stored in its containers since 2008. But rice cannot be stored that long.

Adani Agri Logistics associate general manager Pradeep Sabharwal said the company estimated that it would recover Rs. 750 crore it had invested in the silos in 20 years. Till then, the FCI would pay the company Rs. 90 crore a year for bulk handling of wheat and services such as quality control, storage and quicker despatch with reduced losses. “Fifty per cent of our expenses are on rail freight.”

Explaining the State’s storage woes, FCI Additional General Manager (Storage) S.K. Dhawan said that as against a mammoth wheat and rice stock of 192 lakh tonnes, the storage capacity available was for 205 lakh tonnes.

The current paddy procurement, which has already reached 122 lakh tonnes and is expected to go up to 130 lakh tonnes, was putting pressure on storage, he said. “The situation for wheat [storage], which is kept under the CAP, is tight.”

Popularly called the granary of India, Punjab accounts for 40 per cent of the wheat and 30 per cent of the rice procured by the government for the Targeted Public Distribution System, with the FCI responsible for keeping the stocks as fresh and healthy as possible.

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