World’s Largest Grain Storage Plan in Cooperative Sector

GS Paper III Indian Economy

Context:

Recently, the Government has announced a plan to set up the “world’s largest grain storage plan in cooperative sector”.

A pilot project has been inaugurated in 11 primary agriculture credit societies (PACS) in 11 States under the plan.

Primary Agricultural Credit Societies (PACS):

PACS are village-level cooperative credit societies.
They serve as the last link in a three-tier cooperative credit structure headed by the State Cooperative Banks (SCB) at the state level.
They offer last mile connectivity to farmers in disbursing credit.
Short Term Lending : PACS have the capacity to extend credit i.e.Crop loans with minimal paperwork within a short time.

The Government plans to set up a storage infrastructure of 700 lakh metric tons over the next five years at a cost of Rs 1.25 lakh crore.
- This will enable farmers to store their produce and sell it at the right time according to their own needs. & help them to avail loans from banks.

Reduction of Post Harvest losses from existing 6% :
- This decentralized storage will reduce food grain wastage, enhancing national food security.

Data Statistics: India holds 11% (16 Crore Hectare) of World’s total Cultivable Area (138 Crore Hectare)

Based on the FAO Statistical Data 2021,
- Total Food Grain Production in India is 311 MMT and
- Total Storage Capacity in India is only 145 MMT, i.e, there is a shortage of 166 MMT food Storage.
- There is surplus Storage capacity in other countries 131%, while in India there is a shortfall of 47%.

Drastic reduction on multiple handling and transportation cost: This approach minimizes transportation costs between procurement centers, warehouses, and FPS.
Prevention of distress sale by farmers at low rates:
- Farmers will have options to avoid distress sales, leading to better prices.
Decentralized procurement by FCI/State Government:
- Acting as procurement centers for State Agencies/Food Corporation of India (FCI), and Functioning as Fair Price Shops (FPS).
- Integrate PACS godowns with the food grain supply chain, with a collaborative effort of NABARD and spearheaded by the National Cooperative Development Corporation (NCDC).
Storage based “Hub” and “Spoke” model:
- Establishing Custom hiring centers.
- Creating common processing units for sorting, grading, and more.
Convergence of Existing Schemes:
- This plan helps in convergence of various identified schemes like Agriculture infrastructure fund (AIF), Agriculture Marketing Infrastructure Scheme, and Allocation of food grains under National Food Security act 2013, Procurement Operation at Minimum Support Price etc.

Also Read: Farmers Protest 2.0: Are Farmers Demands Unjustified?

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