Rotting foodgrains: Can FDI in multi-brand retail help?

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Rotting foodgrains: Can FDI in multi-brand retail help?
In a nation where 24% of children go without food everyday, rotting foodgrains at FCI godowns should be an unpardonable offense.

The CNN IBN reported late last week that the damage to food grains due to rains in Rajasthan's Ganganagar district is almost 40,000 metric tonnes of foodgrains. These are lying in the open and had been left neglected by Food Corporation of India (FCI) officials. Perhaps we are showing more concern to birds of the air, who can nibble on food grains stored in the open.

A Reuters report a few days back has said that much of India's grains are left out in the open exposed to potential decay as state-run warehouses can store only 63 million tonnes against the total 82.4 million tonnes of current stocks, which includes some coarse grains such as millets.

A couple of months back an FCI godown caught fire. Was there a pilferage (theft) first and then an act of sabotage?

Consider the strange paradox now: a recent study titled "Save the Children" says that 24% Indian kids go without food every day, while 30% of Indian families have been forced to cut back on food due to rising food prices. It's an irony that food inflation in India is high as 10.49%, while on the other hand we have reports of rotting grains, pilferage of grains and even misuse (liquor being stored in FCI godowns), while grains rot outside.

One recent news report puts the loss in foodgrains, fruits and vegetables at a staggering Rs 44,000 crores, never mind that India has 40% children that are malnourished and these levels are twice as high as the sub-saharan Africa. China's inflation for May has touched 3%, while our WPI inflation continues to be close to 8%, thanks in no less measure to food inflation, which is a result of poor storage and distribution facilities.

Time to push 100% FDI in multi-brand retail

It is estimated that around 40% of the farm produce is lost between the farm and the consumer. The colossal losses are due to inadequate storage and transportation facilities.

Permitting FDI in multi-brand retail would have bought about technology and the much needed investment in refrigerated trucks that are so essential to keep farm produce fresh. It would have ensured investment in warehouses and chilled storage facilities, which are capital intensive and need large sums of money, which is neither coming from the private sector nor the government.

The government has made it clear that 50% of the investment in FDI in multi-brand retail would have to come in back-end infrastructure. This means that it would have to be invested in setting up cold storages, warehouses, logistics, processing, distribution and quality control.

But the country's politicians (select ones) must play vote bank politics. If they give their consent for a FDI in muti brand retail, they would lose their vote bank (people running khiranas). Never mind if crores of rupees is lost due to inefficient and inadequate transportation and storage facilities and millions have to pay higher prices by shopping at the local khiranas.

Foreign corporations like Wal Mart, Tesco and Carerfour can invest the millions needed to stem the rot, and are in fact willing to do so. But, our politicians simply lack the will to push FDI in multi-brand retail. Never mind if there is a wastage, inflation and malnourishment, which has now become an epidemic. Never mind if state-run warehouses can store only 63 million tonnes against the total 82.4 million tonnes of current stocks. At least the birds can nibble on the grains stored in the open.

Read more about: fdi, fci
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