Farmers short-changed again: The racketeering in warehousing and storage facility

(Dr. krishan Bir Chaudhary)

Warehousing plays a crucial role in the food value chain, from production to distribution and retailing. Food is produced by farmers.They produce food, feed, fodder and fibre that sustain this nation of 1.24 billion people. They need warehousing facility and all those support systems promised to them six decades ago by Nehru's government. Instead, the UPA-II wants to establish COLD-CHAIN that only supports the corporations who buy raw foods cheap from dying farmers, convert them into processed foods for domestic and export consumption. The farmers have been short changed time and time again.

Please recall that the Reserve Bank of India [RBI] in 1946 formed an “India Rural Credit Survey Committee” that recommended the establishment of warehouses to strengthen the rural credit and marketing.

As a result of the recommendations of the Committee, the Government of India enacted the Agricultural Produce (Development and Warehousing) Corporation Act, 1956. Among the four key recommendations were:

Scientific storage: In Warehouses the stored produce could be protected from the vagaries of weather and pests [rodents, insects, etc.] and substantially reduce post harvest losses that according to various estimates ranges between Rs. 20,000 to 50,000 annually.

Financing: Warehouses were mandated to meet the financial needs of farmers with a provision for issuing 'WAREHOUSING RECEIPT.' It was felt that the farmer could obtain cash support from any bank against the receipt for his/her stock.

Price stabilization: Warehouses would help in regulating the price levels by regulating the supply of foodgrain in the markets. More goods from the buffer would be released when supplies are less. They would also advice farmers when to sell when there was glut in the market. Thus they would monitor the supply and demand in the interest of farmers. It would also prevent distress sale.

Extension services: Provision for appointing technical officers was made at each warehouse who would advice farmers on seeds, fertigation, irrigation, etc, for various crops consistent with data from market intelligence.

Strategies to reach out to the farmers were further refined with talks of smaller rural warehouses to large nodal warehouses. It should be noted during the early days, the CWCs and SWCs had highly committed staff. They performed admirably and that was responsible in no small measure for rapid agricultural growth during late 50s right up to early seventies.

Should Government promote cold chain when they could not provide vital warehousing services to 148 million farming households? Who benefits from cold chain? Farmers or large corporation? Why should investments in cold chain be subsidized as it is planned? If people came to know of the true purpose of Warehousing Act of 1956, taxpayers wouldn't mind subsidizing hundreds of thousands of warehouses [large, medium, small or micro]. But warehousing corporations. However, if people get to the truth of how warehousing corporations short changed farmers and how cold chains are going to indirectly subsidize large food corporations and many multinational food and agribiz corporations, I doubt even one person would support this sort of lop-sided policy.

The governments [both Central and State] need to re-focus their effort at rapidly expanding warehousing capacity for farmers, stop indirectly subsidizing large firms' control over small producers through cold chains. Most importantly, the government must revive the original concept enshrined in the 1956 Act because the situation for farmers is deteriorating by the day. It will not be too long before India faces a major food crisis.


(Editorial : Kisan Ki Awaaz Magazine)