Food Corporation of India is likely to set the ball rolling for setting up of 42 standalone silos in 10 States by the end of this month.
Silos will help prevent wastage of wheat that is six per cent under the conventional system of storing it in gunny bags horizontally. According to sources, the Inter-Ministerial Group has suggested some changes in the concessional agreement to be signed with those who could bag the contracts for setting up the silos.
time-table for project
The Food Ministry may come out with a concrete time-table for the setting up the silos, as a pilot project, after that.
Four months after this, the process of setting up silos will begin and 24 months from then, they should be ready.
In short, the silos could get going from 2016 procurement season.
Other states
Besides, some States such as Madhya Pradesh also plan to set up silos on their own and these could come up even before that. Some 38 silos with 50,000-tonne capacity will come up in States such as Punjab, Haryana, Uttar Pradesh, Gujarat, Madhya Pradesh and West Bengal.
Further, four silos each with 25,000-tonne capacity will come up in Kerala and Assam.
The Food Ministry has decided to go for standalone silos based on the one set up in Amritsar by L.T. Foods.
The 50,000-tonne silo was set up in April 2011 after the Government decided to make some changes to an earlier plan that was launched in 2006. In 2006, the Food Ministry set up two base depots in Moga (Punjab) and Kaithal (Haryana) with a capacity to hold two lakh tonnes each.
From these depots, wheat was to be moved to Navi Mumbai, Hooghly, Bangalore, Chennai and Coimbatore.
Impressive model
The project had a pioneering effort such as running specialised covered wagons and dedicated terminals for wheat.
Some issues such as minimum transportation charges took a long time to be sorted out but now, things have started moving. However, Food Corporation of India seems to be impressed with the Amritsar model of silos that has won the Gold recognition award of International Finance Corporation (World Bank Group), since it takes into account problems such as farmers coming to mandis with gunny bags or the system of commission agents (arthiyas) that is prevalent in Punjab and Haryana.
According to Brig J.S. Oberoi, Head of Infrastructure projects, L.T. Foods, the advantage of putting up silos, besides avoiding wastage and ensuring quality of grains for nearly three years, is that since the system is vertical, less land is required.
Features
For example, to store 50,000 tonnes of wheat in the conventional system, some 20 acres are required. But the same quantitycan be stored in a silo complex that will require six acres totally. Oberoi told Business Line over phone that the cost for setting up a silo, without including the cost of land, is Rs 30 crore.
While Food Corporation is asking private agencies to have their own land to set up the silos, States such as Madhya Pradesh are ready to offer land for such projects.
“Madhya Pradesh is taking the lead in setting up silos,” Oberoi said.
If the project of setting up 42 silos succeeds, then the Centre has plans to come up with more to store another 18 million tonnes. Setting up of such silos will help overcome problem of bulging stocks.
Currently, Food Corporation has nearly nine million tonnes of wheat as stocks against the mandatory norm of four million tonnes.
The silos are set up on a build, operate, transfer basis with the Government paying the private firms a fixed amount for a tonne of wheat stored each year.
“Setting up of silos is treated as infrastructure project. Therefore, we get loans from banks for these projects at a lower rate of interest,” said Oberoi.
Foreign cos showing interest
The country’s focus on post-harvest operations of foodgrains is attracting foreign players.
“With the Government’s attention shifting from increasing production to post-production, we are seeing a lot of interest from foreign firms to set up infrastructure such as silos,” said Brig J.S. Oberoi, Head of infrastructure projects at L.T. Foods.
When L.T. Foods began setting up a 50,000-tonne silo at Amritsar in Punjab in April 2011, a single US firm showed interest. “Now, when we are keen to take part in Madhya Pradesh project, there are 7-8 global firms that are showing interest.
These firms are from the US, China, Turkey and Australia,” Oberoi said.
L.T. Foods that is keen on such silo projects is also in discussion with the Planning Commission, the brain behind the pilot project to set up 42 silos, to share its Amritsar experience with the others and take it forward from there