An international report Global Food — Waste Not Want Not of the Institution of Mechanical Engineers, London (IME), released a few days ago, has determined that in India about “21 million tonnes of wheat annually perishes due to inadequate storage and distribution, equivalent to the entire production of Australia”.
Taking last year wheat output of 94 million tonnes (mt), this decay works out to 22 per cent. The report is one of the most scathing indictments of the inadequate and unscientific storage facilities to which Indian grain is exposed after harvest.
Even in Pakistan such losses amount to 16 per cent, about 3.2 mt annually, for wheat, while in a developed country such as Australia, this wastage is limited to only 0.75 per cent as the upper end of acceptability. (The losses in the case of rice are even higher.)
In contrast to this estimate of 22 per cent loss of wheat in India, the Food Minister gave a statement in Parliament on December 18, 2012 that “About 0.87 lakh tonne food grain was lost in the FCI godowns till September this fiscal due to factors like moisture, rats, birds and general spoilage. In 2010-11, the food grain loss was 1.56 lakh tonne, while it was 1.31 lakh tonnes in 2009-10 and 0.58 lakh tonnes in 2008-09.” The sum total of these quantities is less than 0.5 million tonnes.
Such a statement of negligible loss either makes a mockery of the estimates generated by IME report, or is totally detached from the ground realities.
This annual feature of stock-building costs the nation thousands of crores due to loss of grains, while crores of stomachs go hungry every day.
It is necessary to conduct physical verification (perhaps through judicial intervention) of the quality and quantity of storage with public agencies to ascertain the truth.
Wake-up call
The objective of the report is not to malign any country, but to serve as a wake-up call to conserve the precious resources that go into the production of that food.
It points out that of the total food produced world-wide (about 4 billion tonnes), 30-50 per cent is wasted at different stages.
The amount of resources that go into producing this food is 2.7 trillion cubic metres of water and 5 Giga hectares (GHa) of land mass from the usable earth area of 10GHa.
Three calories of input is needed for production of one calorie of food for plant, that goes up to 35 calories for beef.
Water consumed for each kg of bread is 1,608 litres, rice 2,479 litres and beef meat 15,415 litres.
A careful reading of the report confirms that India’s agro-policies are in a mess. The more the Government pursues policies devoid of market realities, such as giving free power, free water, highly subsidised fertilisers, inadequate and extremely poor storage conditions, greater the damage we inflict on Mother Nature, and higher the offence we commit against our future generations. This needs to be checked at any cost.
The Government has accumulated huge stocks of wheat/rice in last five years (see chart) , which were 80 mt in 2012 against buffer norm of 32 mt needed as of July 1, 2012 every year. By June 2013, these stocks may exceed 100 mt — overstocking by 68 mt.
Built warehousing is around 46 mt, while CAP (covered and plinth) storages are 17 mt — totalling 63 million tonnes. CAPs are plastic coverings under the open sky, and therefore do not qualify as safe storage.
If the rationale of this international report is applied, 22 mt grains worth Rs 50,000 crore ($9.2 billion) will decay on the basis of average economic cost of Rs 23,000/tonne. This Rs 50,000 crore is “sunk investment” in addition to annulment of other inputs of land, water, energy, fertiliser, transportation costs.
Liquidate stocks
This excludes massive wastage of private inventory at the disposal of producers and distributors.
The said report rightly mentions that “Controlling and reducing the level of wastage is frequently beyond the capability of the individual farmer, distributor or consumer, since it depends on market philosophies, security of energy supply, quality of roads and the presence of transport hubs.
These are all related more to societal, political and economic norms, as well as better-engineered infrastructure, rather than to agriculture”.
Neither modern silos nor sanitised, horizontal warehouses can be created in the next six months.
The only solution to partially recovering this sunk investment is to liquidate large quantities of these stocks either at home, so that people can consume them, or actively export the grain to those nations where it can be consumed.
There is always an issue with bureaucracy and policy makers as to at what price this grain can be sold. They calculate only the monetary costs, such as MSP, taxes, and so on, but not the real cost of water, of energy, or losses.
If the Comptroller and Auditor General (CAG) were to look into this “presumptive loss” (in fact, this is the real loss of resources), the entire food administration responsible for this massive building of stocks may not be able to justify their decisions and actions.
But unfortunately, we don’t have that type of accounting. So, the only thing that one can hope through judicial intervention or from the auditors is to suggest/order the government to liquidate their stocks and save them from rotting. It is hoped wiser policies will be pursued.
(The author is a grains trade analyst.)