Warehousing plays major role in implementing food security: Food minister.

MUMBAI: The Food Security Bill provides food grains to about 82 crore people across the country and there is a strong need to ensure sufficient warehouses to ensure that the grains reach the intended targets. "For this, we will need space to store over 85 million tonnes of grain by 2014," said K V Thomas, minister of state, consumer affairs and food and public distribution, government of India. "In 2009, we had space for 55 million tonnes, and today, we are only at 78 million tonnes."

The minster was giving the inaugural address at a conference on "Building Warehousing Competitiveness - 2013: Maximising Returns Through Capital and Operating Efficiencies", organized by the Confederation of Indian Industry (CII) - Institute of Logistics in Mumbai.

Thomas emphasised that warehousing was an important sector in the context of implementing the food security, which act the government adopted earlier this year. He urged entrepreneurs to take up the task of building warehouses, even though it was not lucrative enough. "Warehouses should have the support of government and I believe banks give out special loans for building warehouses because as an industry, we have to grow and India needs more warehouses," he averred.

He said the government was even thinking of allowing village panchayats to build intermediate warehouses, which will bring storage areas close to the recipients. He pointed out that one of the major reasons for leakages in the public distribution system was due to the lack of warehouses, which led to food grains rotting. "To distribute rice at Rs 5 per kg, the government spends Rs 28. This is a crime," he said, but added that he was confident the leakages could be plugged.

Deviating from his written speech, the minister said India was moving from a welfare state to a rights-based country. "The first step in this direction was the Right to Information act. This is a new and positive turn," he added.

Thomas said the RTI was followed by laws on right to work (the National Rural Employment Guarantee Act), the Right to Education, and finally, the Food Security Act. But he added that there was some concern whether India could produce sufficient food grains, but added that India would have enough not just to feed the entire nation but also have some surplus for the export market.

Moving beyond warehousing, the minister said on reason for the high prices of food was because the government had maintained a high "minimum support price" (MSP, the price at which the government purchases food grains from the farmers). "We can't sell below the MSP," he said.

Thomas complained that some traders had taken advantage of the onion trade to jack up prices, and said the government was aware of their actions and would act if necessary. In his written speech, the minister said logistics companies need to be efficient in their operations and mechanise operations to the extent possible so as to achieve cost savings and reduce losses.

He said India's soon to be expanded national highway network, improved efficiencies in rail cargo network schemes such as airport expansion, and the Golden Quadrilateral would ensure improved efficiencies in road and rail transport besides reducing delays and losses.

Speaking at the event, B S Vasudev, Chief Commissioner of Customs, Mumbai zone, pointed out that businessmen could use custom warehouses where goods could be stored for up to one year without the payment of customs duty. "For the first three months we don't even charge interest on the goods stored," he said. The senior customs officer said such warehouses could be set up either by importers or by those in the warehouse business.

He urged the captains of industry present that if ever their complaints were not being addressed, they should immediately escalate their complaint to the next level, and if needed, till the highest level. "Let me assure you, our officers are always there to help," he asserted.

B Narayan, group president, Procurement and Projects, Reliance Industries Ltd, shared his experience about the difficulty of storing and transporting liquid such as crude, and strongly advocated automation. "Automation ensures efficiency, because warehousing work is routine and monotonous and people get bored, and it helps you know exactly how much inventory is there in the warehouse," he said.

Aman Khanna, Associate Director, Ernst & Young Pvt Ltd, said the warehousing sector has huge potential, but that many in the sector were still not doing too well. He also said there is a dire need for higher end warehouses in the country.

Source : timesofindia.indiatimes.com