Overview
Post harvest losses (henceforth: PHL) of agricultural commodities result in food unfit for human consumption. Lack of modern grain facilities result in lost pledge-financing opportunities; bottlenecks at mandis due to uncoordinated business processes during a narrow procurement window; leading to predatory procurement practices detrimental to farmers’ interests. Micro-grain storage facilities located in a cluster of villages can usher rural prosperity and help India stem post harvest losses at government warehouses.
Post Harvest Losses (PHL)
PHL of agriculture commodities refers to the loss and waste of food, incurred during various stages of the agricultural value chain; namely, production, post harvest handling & storage, processing, distribution and consumption. A 2011 FAO study Global Food Losses and Food Waste, stated that “roughly one-third of food produced for human consumption is lost or wasted globally, which amounts to about 1.3 billion tons per year". In a perfect world, this global food loss and waste would have fed millions of people suffering from hunger by meeting their minimum nutritional requirements.
In 2013, I was moved by media reports of grain rot at various government storage facilities and filed an information query under the Right To Information (RTI) Act, with the Food Corporation of India (FCI) and Central Warehousing Corporation (CWC); two nodal agencies entrusted with the procurement, storage and distribution of food grains in India. While, CWC expressed their inability to respond to my query on the grounds of information requested being too wide in nature, information from FCI’s various offices revealed that 502,389 tons of rice and 136,206 tons of wheat were subject to food loss and waste during 1998 – 2012. In present day, the value of these food stocks indexed to inflation, would amount to nearly 700 crore INR or 122 million USD.
Problem
Majority of cultivators in India have tiny landholdings and are defined as small and marginal farmers. While small farmers are classified as cultivators having up to 2 hectares (5 acres) of land, marginal farmers are those who have up to 1 hectare (2.5 acres). Given their small land holdings, crop harvests are meager in volumes and they have an urgent need to make a sale to meet their debts and obligations. Further, lack of access to modern grain storage facilities and the looming monsoon rains ensures lost opportunities for pledge-financing.
In 1960s, fresh from the success of Green Revolution, Government of India initiated a series of measures to improve and organize the marketing of agricultural commodities through a network of regulated markets. State governments were advised to enact APMC Act, a marketing legislation that would ensure fair environments for market forces, allow regulation of market practices and bring transparency in transactions. Farmers were required to bring their entire harvest/ produce and sell at government regulated mandis. Further, traders participating at these mandis had to get licenses to trade from the state agricultural marketing boards. The ultimate objective of market regulation was to protect the interests of the farmers through fair prices for his produce, timely payments by traders, and prevent exploitation by intermediaries and wholesale buyers. However, with time, the licensing process at mandis became opaque and led to the creation of a monpolistic business environment.
In recent years, Indian agriculture has witnessed bumper crops due to timely monsoon rains and generous minimum support prices (MSP) for principal kharif and rabi crops. MSP is a price determined and declared by Government of India at which government procurement agencies procure wheat, paddy and coarse grains from farmers. MSP for various commodities is decided on the basis of recommendations made by the Commission of Agricultural Costs and Prices (CACP) after consultations with various state governments, agencies and prevailing factors. The idea is to prevent distress sale of crops and ensure farmers’ profits. Food grains procured by agencies such as Food Corporation of India, are then stored, transported and distributed countrywide to masses under the Public Distribution System (PDS).
Bumper crops create a glut in supply of food grains; thereby depressing the market prices in the tezi mandi/ open markets. As a result, the MSP offered at the mandis are the highest available, and the farmer is keen to avail this price. Farmers flock to the nearest mandis with their crops in their bullock carts, tractor or pick-up trucks and attempt to get their harvest sold. While grain merchants and government appointed procurement agents vie with each other during auction to ensure procurement of high quality food grains, fleet operators are seen jostling for right of way where no room exists and mandi officials strive to make sense where no one wants to listen. The farmer is relieved to sell his harvest and faces the ultimate challenge of getting the payment from the mandi/ market yard to clear at the local bank. Post harvest processes, namely; storage, sale and payment seem to be the bigger challenges in the entire crop cycle.
Post harvest losses (henceforth: PHL) of agricultural commodities result in food unfit for human consumption. Lack of modern grain facilities result in lost pledge-financing opportunities; bottlenecks at mandis due to uncoordinated business processes during a narrow procurement window; leading to predatory procurement practices detrimental to farmers’ interests. Micro-grain storage facilities located in a cluster of villages can usher rural prosperity and help India stem post harvest losses at government warehouses.
Post Harvest Losses (PHL)
PHL of agriculture commodities refers to the loss and waste of food, incurred during various stages of the agricultural value chain; namely, production, post harvest handling & storage, processing, distribution and consumption. A 2011 FAO study Global Food Losses and Food Waste, stated that “roughly one-third of food produced for human consumption is lost or wasted globally, which amounts to about 1.3 billion tons per year". In a perfect world, this global food loss and waste would have fed millions of people suffering from hunger by meeting their minimum nutritional requirements.
In 2013, I was moved by media reports of grain rot at various government storage facilities and filed an information query under the Right To Information (RTI) Act, with the Food Corporation of India (FCI) and Central Warehousing Corporation (CWC); two nodal agencies entrusted with the procurement, storage and distribution of food grains in India. While, CWC expressed their inability to respond to my query on the grounds of information requested being too wide in nature, information from FCI’s various offices revealed that 502,389 tons of rice and 136,206 tons of wheat were subject to food loss and waste during 1998 – 2012. In present day, the value of these food stocks indexed to inflation, would amount to nearly 700 crore INR or 122 million USD.
Problem
Majority of cultivators in India have tiny landholdings and are defined as small and marginal farmers. While small farmers are classified as cultivators having up to 2 hectares (5 acres) of land, marginal farmers are those who have up to 1 hectare (2.5 acres). Given their small land holdings, crop harvests are meager in volumes and they have an urgent need to make a sale to meet their debts and obligations. Further, lack of access to modern grain storage facilities and the looming monsoon rains ensures lost opportunities for pledge-financing.
In 1960s, fresh from the success of Green Revolution, Government of India initiated a series of measures to improve and organize the marketing of agricultural commodities through a network of regulated markets. State governments were advised to enact APMC Act, a marketing legislation that would ensure fair environments for market forces, allow regulation of market practices and bring transparency in transactions. Farmers were required to bring their entire harvest/ produce and sell at government regulated mandis. Further, traders participating at these mandis had to get licenses to trade from the state agricultural marketing boards. The ultimate objective of market regulation was to protect the interests of the farmers through fair prices for his produce, timely payments by traders, and prevent exploitation by intermediaries and wholesale buyers. However, with time, the licensing process at mandis became opaque and led to the creation of a monpolistic business environment.
In recent years, Indian agriculture has witnessed bumper crops due to timely monsoon rains and generous minimum support prices (MSP) for principal kharif and rabi crops. MSP is a price determined and declared by Government of India at which government procurement agencies procure wheat, paddy and coarse grains from farmers. MSP for various commodities is decided on the basis of recommendations made by the Commission of Agricultural Costs and Prices (CACP) after consultations with various state governments, agencies and prevailing factors. The idea is to prevent distress sale of crops and ensure farmers’ profits. Food grains procured by agencies such as Food Corporation of India, are then stored, transported and distributed countrywide to masses under the Public Distribution System (PDS).
Bumper crops create a glut in supply of food grains; thereby depressing the market prices in the tezi mandi/ open markets. As a result, the MSP offered at the mandis are the highest available, and the farmer is keen to avail this price. Farmers flock to the nearest mandis with their crops in their bullock carts, tractor or pick-up trucks and attempt to get their harvest sold. While grain merchants and government appointed procurement agents vie with each other during auction to ensure procurement of high quality food grains, fleet operators are seen jostling for right of way where no room exists and mandi officials strive to make sense where no one wants to listen. The farmer is relieved to sell his harvest and faces the ultimate challenge of getting the payment from the mandi/ market yard to clear at the local bank. Post harvest processes, namely; storage, sale and payment seem to be the bigger challenges in the entire crop cycle.
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