STORAGE AND WAREHOUSING

A 2011 report by a UN body, FAO, puts wastage in fruits and vegetables as high as 45% of produce (post-harvest to distribution) for developing Asian countries like India. Role of government in India is crucial for the Agri supply chain ecosystem to minimise these losses effectively.

Storage is an important marketing function, which involves holding and preserving goods from the time they are produced until they are needed for consumption.

  • The storage of goods, therefore, from the time of production to the time of consumption, ensures a continuous flow of goods in the market.
  • Storage protects the quality of perishable and semi-perishable products from deterioration;
  • Some of the goods e.g., woollen garments, have a seasonal demand. To cope with this demand, production on a continuous basis and storage become necessary;
  • It helps in the stabilization of prices by adjusting demand and supply;
  • Storage is necessary for some period for performance of other marketing functions.
  • Storage provides employment and income through price advantages.

Types

Underground Storage Structures

Underground storage structures are dugout structures similar to a well with sides plastered with cow dung. They may also be lined with stones or sand and cement. They may be circular or rectangular in shape. The capacity varies with the size of the structure.

Advantages

  • Underground storage structures are safer from threats from various external sources of damage, such as theft, rain or wind.
  • The underground storage space can temporarily be utilized for some other purposes with minor adjustments; and
  • The underground storage structures are easier to fill up owing to the factor of gravity.

Surface storage structures

Food grains in a ground surface structure can be stored in two ways – bag storage or bulk storage.

Bag storage

  • Each bag contains a definite quantity, which can be bought, sold or dispatched without difficulty;
  • Bags are easier to load or unload.
  • It is easier to keep separate lots with identification marks on the bags.
  • The bags which are identified as infested on inspection can be removed and treated easily; and
  • The problem of the sweating of grains does not arise because the surface of the bag is exposed to the atmospheres.

Bulk or loose storage

  • The exposed peripheral surface area per unit weight of grain is less. Consequently, the danger of damage from external sources is reduced; and
  • Pest infestation is less because of almost airtight conditions in the deeper layers.
  • The government of India has made efforts to promote improved storage facilities at the farm level.

Improved grain storage structures

For small-scale storage

PAU bin – This is a galvanized metal iron structure. It s capacity ranges from 1.5 to 15 quintals. Designed by Punjab Agricultural University.

Pusa bin – This is a storage structure is made of mud or bricks with a polythene film embedded within the walls.

Hapur Tekka – It is a cylindrical rubberised cloth structure supported by bamboo poles on a metal tube base, and has a small hole in the bottom through which grain can be removed.

For large scale storage

CAP Storage (Cover and Plinth) – It involves the construction of brick pillars to a height of 14″ from the ground, with grooves into which wooden crates are fixed for the stacking of bags of food grains. The structure can be fabricated in less than 3 weeks. It is an economical way of storage on a large scale.

Silos – In these structures, the grains in bulk are unloaded on the conveyor belts and, through mechanical operations, are carried to the storage structure. The storage capacity of each of these silos is around 25,000 tonnes.

Warehousing

Warehouses are scientific storage structures especially constructed for the protection of the quantity and quality of stored products.

Importance of Warehousing

Scientific storage: The product is protected against quantitative and qualitative losses by the use of such methods of preservation as are necessary.

Financing: Warehouses meet the financial needs of the person who stores the product. Nationalized banks advance credit on the security of the warehouse receipt issued for the stored products to the extent of 75 to 80% of their value.

Price Stabilization: Warehouses help in price stabilization of agricultural commodities by checking the tendency to making post-harvest sales among the farmers.

Market Intelligence: Warehouses also offer the facility of market information to persons who hold their produce in them.

Working of Warehouses

  • Acts: – The warehouses (CWC and SWCs) work under the respective Warehousing Acts passed by the Central or State Govt.
  • Eligibility: – Any person may store notified commodities in a warehouse on agreeing to pay the specified charges.
  • Warehouse Receipt (Warrant): – This is receipt/warrant issued by the warehouse manager/owner to the person storing his produce with them. This receipt mentions the name and location of the warehouse, the date of issue, a description of the commodities, including the grade, weight and approximate value of the produce based on the present prices.
  • Use of Chemicals: – The produce accepted at the warehouse is preserved scientifically and protected against rodents, insects and pests and other infestations. Periodical dusting and fumigation are done at the cost of the warehouse in order to preserve the goods.
  • Financing – The warehouse receipt serves as a collateral security for the purpose of getting credit.
  • Delivery of produce: – The warehouse receipt has to be surrendered to the warehouse owner before the withdrawal of the goods. The holder may take delivery of a part of the total produce stored after paying the storage charges.

Types of warehouse

On the basis of Ownership

  1. Private warehouses: These are owned by individuals, large business houses or wholesalers for the storage of their own stocks. They also store the products of others.
  2. Public warehouses: These are the warehouses, which are owned by the govt. and are meant for the storage of goods.
  3. Bonded warehouses: These warehouses are specially constructed at a seaport or an airport and accept imported goods for storage till the payment of customs by the importer of goods. These warehouses are licensed by the govt. for this purpose. The goods stored in this warehouse are bonded goods.

Following services are rendered by bonded warehouses:

  1. The importer of goods is saved from the botheration of paying customs duty all at one time because he can take delivery of the goods in parts.
  2. The operation necessary for the maintenance of the quality of goods – spraying and dusting, are done regularly.
  3. Entrepot trade (re-export of imported goods) becomes possible.

On the basis of Type of Commodities Stored

  1. General Warehouses: These are ordinary warehouses used for storage of most of food grains, fertilizers, etc.
  2. Special Commodity Warehouses: These are warehouses, which are specially constructed for the storage of specific commodities like cotton, tobacco, wool and petroleum products.
  3. Refrigerated Warehouses: These are warehouses in which temperature is maintained as per requirements and are meant for such perishable commodities as vegetables, fruits, fish, eggs and meat.

Warehousing in India

COLD STORAGE

India is the largest producer of fruits and second largest producer of vegetables in the world. In spite of that per capita availability of fruits and vegetables is quite low because of post-harvest losses which account for about 25% to 30% of production. Besides, quality of a sizable quantity of produce also deteriorates by the time it reaches the consumer. Most of the problems relating to the marketing of fruits and vegetables can be traced to their perishability. Perishability is responsible for high marketing costs, market gluts, price fluctuations and other similar problems. At low temperature, perishability is considerably reduced and the shelf life is increased and thus the importance of cold storage or refrigeration.

The first cold store in India was reported to have been established in Calcutta in 1892. However significant progress in the expansion of the cold storage industry in the country has been made only after independence. With a view to ensuring the observance of proper conditions in the cold stores and to providing for development of the industry in a scientific manner, the govt of India and the ministry of agriculture promulgated an order known as “Cold Storage Order, 1964” under Section 3 of the Essential Commodities Act,1955. The Agricultural Marketing Advisor to the Govt of India is the Licensing Officer.A cold storage facility accessible to them will go a long way in removing the risk of distress sale to ensure better returns.

Status of Cold storage and its potential in India
The estimated annual production of fruits and vegetables in the country is about 130 million tonnes. This accounts for 18% of our agricultural output. Due to diverse agro climatic conditions and better availability of package of practices, the production is gradually rising. Although, there is a vast scope for increasing the production, the lack of cold storage and cold chain facilities are becoming major bottlenecks in tapping the potential. The cold storage facilities now available are mostly for a single commodity like potato, orange, apple, grapes, pomegranates, flowers, etc. which results in poor capacity utilization.

Storage of foods and Storage Conditions
Foods and many other commodities can be preserved by storage at low temperature, which retards the activities of microorganisms. Microorganisms are the spoilage agents and consist of bacteria, yeasts and moulds. Low temperature does not destroy those spoilage agents as does high temperature, but greatly reduces their activities, providing a practical way of preserving perishable foods in their natural state which otherwise is not possible through heating. The low temperature necessary for preservation depends on the storage time required often referred to as short- or long-term shortage and the type of product.
In general, there are three groups of products:

  1. Foods that are alive at the time of storage, distribution and sale e.g. fruits and vegetables,
  2. Foods that are no longer alive and have been processed in some form e.g. meat and fish products, and
  3. Commodities that benefit from storage at controlled temperature e.g. beer, tobacco, khandsari, etc.

Living foods such as fruits and vegetables have some natural protection against the activities of microorganism. The best method of preserving these items is to keep the product alive and at the same time retard the natural enzyme activity which will retard the rate of ripening or maturity.

Preservation of non-living foods is more difficult since they are susceptible to spoilage. The problem is to preserve dead tissues from decay and putrefaction. Long term storage of meat and fish product can only be achieved by freezing and then by storing it at temperature below -150C. Only certain fruits and vegetables can benefit from freezing. However, for fruits and vegetables one should be very careful about the recommended storage temperature and humidity a deviation from which will have adverse effect on the stored product leading to even loss of the entire commodity.
Products such as apples, tomatoes, oranges, etc. cannot be frozen and close control of temperature is necessary for long term storage. Some product can also be benefited by storing under controlled atmosphere and modified atmosphere conditions.
Dairy products are produced from animal fats. They suffer from the oxidation and breakdown of their fats, causing rancidity. Packaging to exclude air and hence Oxygen can extend storage life of such foodstuffs.

Marketing of agricultural produce:

The exponential growth in the country’s food grain production from 51 million tonnes in 1950–51 to about 252 million tonnes in 2014–15 has not translated into higher incomes and poverty reduction for the farmers. The prime reasons explaining this situation are the fragmented marketing ecosystem and the dominance of intermediaries in the supply chain of agricultural produce.

The Agricultural Produce Market Committee (APMC) markets in India, the primary market infrastructure, are present only in 23 states and five Union Territories in India. The norm of the National Commission on Farmers that there should be at least one regulated market within a radius of 5 kms is also not being fulfilled.

Although, theoretically, the APMCs are run by the state governments, the business in these markets actually has been hijacked and cartelised by the traders and commission agents operating in these markets. The APMC Act restricts the farmer from selling his produce outside the market and mandates that the sale happens only through the commissioned agents.

The electronic National Agricultural Market (e-NAM) has been launched to provide a national unified platform, a single national market also allowing interstate trading of agricultural produce, which ensures transparent price discovery and elimination of middlemen so as to enable the farmer to get the right price. However, this initiative has proven to be a non-starter.

Markets and marketing are naturally the territory of the private sector. There is an urgent need for the governments to understand this and open up this domain to the private sector. Of course, this comes with some qualifications. This measure is intended for the farmers. Hence, the private players cannot overshadow the farmers’ interest. To this extent, government regulations are reasonable.

The first step is to give farmers and consumers the freedom to organise themselves as markets. The natural profit maximising outcome of this will be the launch of online markets by private players as such markets will ensure the desired price discovery. The role of the government here is to act against the resistance towards this move. Also, the government needs to design an adequate framework governing such markets to help them achieve competition, fair bidding, transparent price discovery and ethical market practices.

Thriving private markets will enable the development of a robust marketing supply chain since well-functioning markets imply profits and growth of the sector. The profits of those operating in the agricultural supply chain are interlinked. After all, only after the produce is sold to the end-consumer at a profit will each of those in the chain make profit. Hence, incubating each of the components in the supply chain in isolation may not make much sense. This will involve heavy investments. Yet, the profits to be made in such a venture is quite appreciable. Entities such as Star Agri, SV Agri, Cold Star Logistics are some such ventures. The government needs to create an environment conducive for such investments so that more players enter this domain.

An important input for the farmers is information, be it about inputs or outputs. A lot of enterprises are currently focused on providing information about inputs. But output related information need not always come from the online markets. The government can undertake information dissemination of price of agricultural produce on its own and encourage the same as a viable business opportunity for the private sector which can tackle the information asymmetry facing the farmers.

There is a need to empower the farmers to move beyond being a producer to becoming an agripreneur who understands agricultural marketing and beyond. An action plan needs to be drawn up to achieve this objective keeping in mind the poorest farmer. The most vulnerable farmer must gain access to and understand the dynamics of the export markets as well.