Warehousing Needs More Reforms, Technology, says IIMB-NCDEX IPFT Report

“India’s existing warehousing reforms are not enough to accommodate the storage and credit requirements of small landholders and the government should undertake further reforms in the warehousing sector along with incentives to farmers to encourage the use of regulated warehouses in the country,” unveiled the report, which was jointly conducted by the Investor Protection Fund Trust of National Commodity and Derivatives Exchange Ltd. (NCDEX) and IIM-Bangalore.

The research report was unveiled in New Delhi yesterday late evening in the august presence of T K Manoj Kumar, Chairman, Warehousing Development and Regulatory Authority (WDRA) Samuel P Kumar, Joint Secretary, Department of Agriculture and Farmers Welfare, Government of India (GoI), Nandita Gupta, Joint Secretary, Department of Food and Public Distributions (GoI), Dr. Gopal Naik, Professor, IIM Bangalore and Arun Raste, MD & CEO, NCDEX.

The report titled “Agri Warehousing in India: Trend, Constraints and Policies” was prepared under the guidance of Dr. Gopal Naik, Professor, IIM, Bangalore and his team.

While releasing the research report T K Manoj Kumar, Chairman, WDRA said, “WDRA is in the process of reducing the regulatory burden as there is a scope for further improvement in agriculture warehousing. Warehousing is not just about storage. It also deals with other ancillaries. There is definitely a scope for improving the warehousing sector.”

The report has suggested the need to increase funding for research in the warehousing sector to encourage digital traceability through the adoption of blockchain technology, use of newer technologies like hermetic storage, promote the ownership of warehouses by FPOs and encourage e-Negotiable Warehouse Receipt (e-NWR) system among others as the next leg of reforms.

Among other important points that the report highlighted, one was about price rationalization. “Organized warehousing shows a drop in volatility in prices and also reduces the price gap between the wholesale price index and the consumer price index,” it says.

“A lot has been done by the government in the past to promote the scientific warehousing in the country. However, we need to reform the sector in a big way to make this system more efficient and robust enough to protect the interest of small farmers as well as to ensure people get good quality farm produce,” said Arun Raste, MD and CEO, NCDEX.

The event started with the introductory remarks by Kapil Dev, Chief Business Officer, NCDEX, “The warehousing ecosystem has been playing an important role in strengthening the Agri marketing. NCDEX has been the first mover in introducing industry’s best quality parameters for agri warehousing, including a state-of-the-art eNWR system facilitating Agri financing. NCDEX’s National Commodity Clearing Limited (NCCL) accredited warehouses have now become the nodal point for the convergence of futures and spot market, which has benefited market participants with an efficient and transparent price discovery mechanism” said Kapil Dev.

Joint secretary in the food ministry Nandita Gupta said the government is testing an alternative for CAP (Cover and Plinth) storage, and if successful, the government will come out with a policy. Joint secretary in the agriculture ministry Samuel P Kumar mentioned various interventions that are in the pipelines to further develop the warehousing infrastructure in the country.

The report noted storage capacities in the private sector increased with a government support, rising almost four-fold in nine years to 76 million tonnes until 2019-20, accounting for 45% of the total capacity of165 million tonnes. However, the total capacity is far from enough looking at the country’s 300-million-tonne plus food grain production. Hence, there is a need to enhance storages with new technologies such as blockchain and hermetic storages to achieve operational efficiency.