Well meet foodgrain requirement under FSB

Written by Sandip Das | Updated: Aug 21 2013, 09:49am hrs
The UPA governments ambitious National Food Security Bill is slotted for passage in the ongoing monsoon session of Parliament. The Bill envisages providing highly subsidised foodgrains to 67% of the countrys population. The Food Corporation of India (FCI) is expected to play anchor in ensuring that sufficient foodgrain is available for the implementation of the mega food security scheme. C Vishwanath, chairman & managing director, FCI, spoke to Sandip Das on the challenges the corporation is likely to face.

What are the logistical arrangements FCI is making for the implementation of the food security legislation

The annual requirement of foodgrains to meet the demand under the national food security law is estimated at 61.2 million tonne (mt). As on August 1, the available foodgrain stock in the central pool is 69.61 mt (40.38 mt wheat and 29.23 mt rice). The average procurement during the last 3 years has been 63.3 mt (29.6 mt of wheat and 33.7 mt rice). Hence, there is sufficient foodgrain to meet the requirements under the proposed law.

The storage capacity, as on July 30, stood at 74.6 mt for foodgrains from the central pool. This would be supplemented by about 20.3 mt with the creation of both conventional and silo capacities by private sector participation under the Private Entrepreneur Guarantee (PEG) scheme. We have already taken over facilities totalling a capacity of 7.3 mt, while the rest is expected to be ready in the next couple of years. Further, FCI will be adding capacity of 0.6 mt, especially in the difficult terrain of the north-eastern states, as is envisaged in the 12th Plan. We also have the option of hiring capacities from private or public sector players, based on actual demands.

Coming to transportation, the estimated increase is about 15%, which would be met in close coordination with the Railways. FCI is fully geared to meet the logistics requirements for the implementation of the proposed food security law.

Commission for Agricultural Costs and Prices (CACP) chairman Ashok Gulati has stated that a chunk of foodgrains is wasted because of FCIs inability to store scientifically

The storage issues have already been addressed. The stocks are stored by FCI in a scientific manner. Wheat stocks are stored in cover and plinth (CAP), which is a proven and time-tested method.

Relative to the quantum of our operations, the portion of grains that is considered spoilt or damaged is minuscule. For example, the total volume of grains damaged in 2012-13 was 3,145 tonnes, or 0.006 % of the total quantity issued.

It is to be understood that grains are a perishable commodity. When we handle such large volumes and store them for long periods of time, a certain level of damage is inevitable. On average, FCI moves about 3.5 mt of foodgrains every month over an average distance of about 1,500 km, many times in adverse weather conditions. However, we endeavour constantly to keep the operational losses and damages to the barest minimum.

Would there be a mechanism to ensure that foodgrains are available to FCI for procurement year after year notwithstanding decline in production

The quantum of procurement is directly related to production and minimum support price (MSP). Over the last few years, the production of foodgrains has either been increasing or stayed steady. Though the current level of production and procurement is satisfactory, the government of India is aggressively pursuing the agenda of increasing production further, especially in the eastern states of the country where there is significant untapped potential. Concerted efforts are being made under the Bringing Green Revolution to Eastern India (BGREI) scheme to leapfrog foodgrain production. FCI is also playing its part in this by increasing the storage capacities in these states and strengthening the available procurement apparatus. We are confident that the supply position will match the requirements in the future.

Will the government have to import foodgrains for the implementation of the proposed food security legislation if domestic procurement falls short of the requirement

Given the sturdy stock position and the increasing or steady trends in procurement, we do not foresee any such requirement. However, in the past, whenever there has been a shortage of foodgrain in the country, we have imported. We are committed to meet the requirements of the country and every possible action in this direction shall be taken as and when the need arises.

What improvements does the FCI need to make in its infrastructure to ensure timely supply to the states

In the 50 years of its existence, FCI has never failed to meet the requirements of any state in the country in terms of foodgrain supply. We are confident that we will keep this impeccable track record up in the future. Our infrastructure is constantly improving to meet increasing demands. For example, the storage capacity available for central pool stocks, which was 58.4 mt as on March 31, 2010, is expected to reach 81.1 mt by March 31, 2014, recording a growth of 39% over 4 years.

Please explain the financial implication of the implementation of the food security law.

We estimate an additional implication of about R24,000 crore in food subsidy once the law is implemented. The impact of the Food Security Bill will stand at almost R19,000 crore for FCI, assuming that we will be supplying about 80% of the total quantity required. The remaining portion will come from states under the Decentralised Procurement (DCP)this will be applicable to states where DCP has been implemented (like Madhya Pradesh, Chhattisgarh, Orissa, Karnataka, etc).

Given that pending dues from the Centre is in the excess of R30,000 crore, how is FCI going to raise funds for its operations following the passage of the Bill

We are requesting the government to allocate the arrears in a supplementary budget or through revised estimates. The government has given us a ways and means advance of R10,000 crore to use till it clears its dues. We are also availing short-term loans up to R20,000 crore. With an objective to reduce the cost of borrowing, we have already approached the government to increase the equity capital by R8,000 crore and for providing guarantee for issuing bonds worth R8,000 crore.

Will FCIs borrowings go up because of the implementation of food security law

The additional subsidy requirement is estimated at around R24,000 crore. If the government provides adequate budgetary support for this amount, there may not be any increase in the borrowings by FCI. Otherwise we will have to borrow more, either through increased food credit or through other options like short-term loans, bonds, etc.

Is FCI bringing in any structural or organisational changes for the implementation of the the proposed food security law

FCI is already managing the public distribution system (PDS) of the country effectively. Hence, no major structural or organisational changes might be required to implement the National Food Security Ordinance. However, as part of our efficiency enhancement efforts, special emphasis is being given to capacity-building of the workforce. We have also launched a scheme nurture and mentor next generation leaders, wherein the young recruits will be mentored by the seniors for smooth and seamless assimilation into the organisation.

Will FCI need to recruit a large number of personnel for management of the requirements of the food security law

This is one area where a lot of work is being done. At present, we have 26,716 employees against the sanctioned strength of 45,451. This massive shortage, of 18,735 employees, needs to be filled, especially considering the expected increase in the scale of operations for effective implementation of National Food Security Ordinance. Already, about 1,700 new recruits have joined the organisation and about 8,000 are expected to join by December 2013. We have set an ambitious target of filling the vacancies in this financial year itself.