Scientific Disposal of Buffer Stocks in India – Part 1 of 3

Pulses

Indian Government has done a commendable job in ensuring food safety for the country’s more than 1.2 billion population. Popularly known as “buffer stock management of agricultural produce”, this has served well to almost eradicate hunger from the country. However, there is surely enough room to further improve the management of these buffer stocks, especially in their disposal.

As capital gets blocked in the commodities procured under various food safety schemes, an efficient and timely disposal mechanism would enhance its effectiveness manifold. The government is likely to incur reduced trade losses and lower interest costs in case the material procured by the government gets liquidated in a systematic and timely manner.

Disposal of stocks procured from farmers across the country, including but not limited to, key commodities like Wheat, Pulses and Oilseeds in a timely and efficient manner has been a challenge. As new season approaches, the old stocks must give way to the new stocks else warehouse space may not be available. Owing to the limited availability of  warehousing space for storage of new crops, it is not uncommon for previous year stocks being disposed urgently at uneconomical costs. While a scientific and timely disposal may not always stop losses, it surely will reduce the current level of losses, acceptable up to 40% of the procured value.

Last season, when Pulses recorded a bumper harvest of approximately 22.9 million tonnes that led to market prices falling below the Minimum Support Prices (MSPs), the Central Government procured buffer stock of Pulses to the tune of approximately 2 million tonnes to discourage market manipulation and provide a cushion against price rise to consumers.

The concept of a buffer stock was first introduced during the 4th Five Year Plan (1969-74) when a buffer stock of 5 million tonnes of foodgrains was envisaged. Since then, the Central Government has been procuring buffer stock through its key Government Enterprises like Food Corporation of India (FCI – mainly Wheat, Paddy and Maize) and NAFED (mainly Pulses and Oilseeds) to ensure better prices to farmers during glut seasons and augment unhindered supply to discerning consumers in times of price rise.

Here are some questions that need resolution:

1. How to systematically and scientifically dispose the buffer stock?

2. Should we work towards a concrete, time-bound disposal plan?

3. How do we involve private sector to actively participate in procurements?

There are more questions that need answers in a complex environment like the one in India. Nevertheless, with advancement in technology and its adoption in our country, answers to the above questions should not be difficult to find.

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