Increased private sector involvement in warehousing could halve the amount of grains that gets wasted
For a few years now, India’s self sufficiency in food grains has been accompanied by reports of wastage due to poor storage. All this could be a thing of the past if the Warehouse Development & Regulation Act (WDRA) 2007 is implemented well. The WDRA will allow private investment in good storage facilities.
Currently, much of the storage of grains is done by the Food Corporation of India (FCI), the Central Warehousing Corporation (CWC) and other state storage agencies. The subsidiaries of the two biggest commodity exchanges in India have also been active in this sector with limited storage facilities. India’s largest agricultural commodity exchange, National Commodities and Derivatives Exchange (NCDEX), has a warehousing subsidiary known as National Collateral Management Services (NCMSL). Close on its heels is National Bulk Handling Corporation (NBHC), a subsidiary of Multi Commodity Exchange (MCX), the other major player in warehousing agri products.
WDRA is important because the current storage facilities in the country are far fewer than what they ought to be. Building storage facilities close to cropping areas requires more private investment. This requires the warehousing business to be made more attractive.
A big disincentive so far has been the requirement for warehouses to be ‘cleared’ by multiple authorities — the Agricultural Produce Market Committee (APMC), the local corporation, the co-operative society and other such bodies. Once WDRA is implemented, all agricultural warehouses will have to meet the norms laid down by the WDRA. “We believe that there will soon be a convergence of all these roles under the WDRA,” says Anil Choudhary, managing director and CEO, NBHC.
(This story appears in the 17 December, 2010 issue of Forbes India. To visit our Archives, click here.)