In order to optimize the utilization of its assets, the Food Corporation of India (FCI) is planning to create additional modern storage facilities using its “pool of land” through attractive investments from the private sector.
Sources told FE that the creation of additional storage facilities would reduce FCI’s reliance on employees hired by private entities to store food grains. Currently, of FCI’s 80 million tonnes (mt) of grain storage facilities, 35 mt are leased to private entities.
The FCI owns several assets that are primarily used for conventional food grain preservation storage facilities. Sources have indicated that these “plots of land” could be offered to the private sector for redevelopment and monetization through the creation of additional storage facilities.
The company, in conjunction with state agencies, handles approximately 80 to 100 tons of food grains per year. About 60 MT, mainly wheat and rice, are allocated annually to more than 80 million beneficiaries under the National Food Security Law.
According to Food Ministry sources, the creation of additional storage is expected to attract investment of around Rs 2,600 crore over the next two years, while the company has identified around 200 storage facilities which have development potential. modern storage.
In a March 2021 communication, the Department of Consumer Affairs, Food and Utilities, proposed asset monetization for 7,000 acres and 3,500 acres of land held with FCI and Central Warehousing Corporation (CWC) to the over the next three years. The proposed asset upgrade would cover grain storage facilities of 17.5 mt of FCI and 3.4 mt of CWC.
In the case of storage facilities where increased storage is not required, FCI has identified approximately 14 locations that have the potential to provide an additional 0.33 tonnes of storage capacity for alternative use. Officials said the alternative use of storage facilities could be used for cold storage, e-commerce, B2B and B2C warehousing and storage of fertilizers, industrial goods, etc.
As of April 1, FCI and state agencies had over 50 MT of rice and wheat against the buffer standard of 21.04 MT.
Meanwhile, in an effort to attract business investment in food grain storage infrastructure, the Ministry of Food has approved a policy that encourages private players to bid on several projects to build 249 silos at the state-of-the-art technology with almost 11 million tonnes (MT) of wheat storage capacity for FCI.
The silos will be built in 12 states including Punjab, Haryana, Madhya Pradesh, Maharashtra and Kerala over the next four to five years through a public-private partnership (PPP) model with an estimated investment of Rs 9,200 crore.
The FCI will use the silos for wheat storage through a thirty-year lease with private entities.
According to the tender document, fixed storage fees to be paid by CFI to private entities on the basis of one ton per year are the tender parameters. This fixed fee increases by 70% of the wholesale price index and 30% of the consumer price index.