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Scrutiny
 
SHRINKAGE: NATIONAL LOSS
Off Limit for Over 600 Million?
India, as a Unique case in The World, ranks 2nd in Farm output and also ranks on top in terms of Child Deaths due to Malnutrition. There are huge Flaws in The Delivery Mechanism. Who will solve them?
Issue Date - 17/03/2011
 
Wherever he goes, whatever he does, Sharad Pawar & controversy are inseparable. Their bonhomie has only grown since he became the Minister of Agriculture & Food Processing. This is not only because the Indian media is biased against him. His policies & statements are equally at fault. More recently, for added effect, he repeated this on February 22, 2011 as he commented, “The government can not purchase and manage vegetables and fruits.” He further added that any possibilities of purchasing and managing perishable produce directly from farmers in line with other commodities like wheat and rice was simply not possible. To any person, these remarks would sound quite unbelievable, especially when the person giving these remarks is heading the responsible ministry. Especially when Sharad Pawar himself had accepted last year in May that “the country wastes Rs.580 billion worth of food items every year due to lack of poor storage facilities.” Shouldn’t it have been his ministry’s responsibility to proactively find out how to resolve the issue?

While the perishable products market accounts for around $3 billion of the $28 billion organised retail industry, wastage is 3-3.5% of sales – significantly higher as compared to the global rate of less than 1%. Wastage takes place due to inadequate post-harvest infrastructure such as storage facilities, transportation and proper cold chain facilities. While 15% wastage takes place at the farm level, 25% happens during transportation. This is a huge loss for India, which takes pride at being the world’s 2nd largest farm output country with above 228 million tonnes of output.

Ironically, India is also home to over 230 malnourished people. It is a country where malnourishment is the primary cause for around 50% of child deaths. Given this, India can’t afford to waste any food products irresponsibly. And it’s not rocket science to find out the solution. All that the agriculture ministry should do, hand in hand with the Ministry of Consumer Affairs, Food and Public Distribution is that investment into developing food stock capacity infrastructure should be increased massively. India, with only 60 million tonnes in food storage capacity, lacks far behind when compared with China’s 150 million tonnes. At the same time, godowns of Food Corporation of India (FCI) are 93% full.

Yes, the government is inviting private players to build new storage facilities and rent them to the government for seven years. But even if it materialises, that is never going to be sufficient, with growing farm output and productivity. The government has to make substantial investments to increase public storage capacity.

The food processing industry is still indigenous and unorganised. Only around 2% of perishable goods are processed every year – very low compared to Thailand’s 30%, Brazil’s 70% or 78% in the Philippines. Private players’ participation can play an important role, as the lack of an organised and integrated approach to a cold chain infrastructure leads to losses estimated at around Rs.1 trillion every year. As per various researches, allowing organised retail to directly buy food grains from farmers can increase efficiency in the supply chain. Farmers’ earnings can also go up by some 40-50%. But this needs strong political commitment from Pawar.

 

Akram Hoque           

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