Role of Govt. in Agricultural Marketing: Public Sector Institutions: CWC, SWC, FCI, CACP, DMI– their objectives and functions

Development of Warehousing in India

The concept of warehousing in India dates back to 1928 when the Royal Commission on Agriculture highlighted its importance. This was followed by the Central Banking Enquiry Committee in 1931, which also emphasized the need for a robust warehousing system. In 1944, the Reserve Bank of India (RBI) recommended that state governments introduce laws to regulate warehouse operations. Later, the All-India Rural Credit Survey Committee, established by the RBI in 1951 and reporting in 1954, proposed a structured warehousing framework as part of integrated rural credit and marketing reforms.

Based on these recommendations, the Government of India passed the Agricultural Produce (Development and Warehousing) Corporations Act in 1956. Key provisions of this Act included:

• Formation of a National Co-operative Development and Warehousing Board (set up on 1st September 1956)
• Creation of the Central Warehousing Corporation (CWC) (established on 2nd March 1957 in Delhi)
• Establishment of State Warehousing Corporations (SWCs) across various states (between July 1957 and August 1958)

Central and State Warehousing Corporations

The Central Warehousing Corporation (CWC), set up in 1957, serves as a public sector warehouse provider offering logistics support to various industries, especially agriculture. Currently, CWC manages 432 warehouses across India with a combined capacity of approximately 9.96 million tonnes. Services offered include storage for foodgrains, industrial goods, bonded warehousing, inland depots, and air cargo complexes.

Definition of Warehousing

Warehouses are specially built structures used for the scientific storage of commodities. They ensure the preservation of both quantity and quality, serving as a tool for managing surplus supplies and making them available during shortages.

Core Functions of Warehousing

1. Scientific storage
2. Financing through warehouse receipts
3. Stabilization of prices
4. Dissemination of market intelligence

Warehousing Corporation Act, 1962

Under this Act, the CWC is authorized to:

1. Invest in share capital of SWCs
2. Act on behalf of the government for buying, selling, and storing agricultural inputs and notified goods
3. Perform additional duties as specified under law

Operational Scope

CWC provides scientific storage services for over 400 different products, including perishables and moisture-sensitive items, through 476 warehouses and a workforce of 5,658 trained personnel.

Its major operations include:

• Storage facilities for various commodities
• Export/import warehousing via 36 container freight stations
• Bonded warehouses for imported goods
• Fumigation and pest control services
• ISO container storage and transport support

Types of Warehouses

1. Private Warehouses: Owned by manufacturers or wholesalers for internal distribution
2. Public Warehouses: Open for use by various clients
3. Automated Warehouses: Operate using advanced robotics and inventory systems
4. Climate-Controlled Warehouses: Maintain specific temperature/humidity conditions
5. Distribution Centers: Serve as hubs for dispatching goods

Warehouse Receipt (Warrant)

This is an official document issued by the warehouse authority to the depositor, detailing the location, date of issue, commodity description, weight, grade, and approximate market value. It serves as proof of ownership and can be used as collateral for obtaining loans, often up to 75% of the produce’s value. These receipts may be negotiable or non-negotiable.

State Warehousing Corporations (SWCs)

Individual states also formed their own warehousing corporations, with Bihar setting up the first in 1956. By March 2001, 1,440 warehouses were operational under various SWCs, with a combined capacity exceeding 131.38 lakh tonnes. SWCs are jointly owned by the respective state government and the CWC, and function under dual administrative control.

Regulations and Licensing

Warehousing operations are governed by central and state warehousing acts. Key licensing provisions include:

• Applications may be made by individuals, companies, or associations
• Warehouses are inspected for structural soundness and financial viability before licensing
• Licenses require periodic renewal
• Only notified commodities may be stored
• The owner is responsible for cleanliness and safe upkeep of goods

Preservation and Safety Measures

Stored goods are protected using scientific methods, including regular fumigation and pest control. Warehouses ensure separate storage for different goods to prevent contamination or damage.

Delivery and Withdrawal Process

To retrieve stored goods, the depositor must submit the warehouse receipt and pay applicable storage charges. Partial withdrawals are permitted if necessary.

Expansion and Infrastructure

The Government of India, along with FCI, cooperative societies, CWC, and SWCs, has developed an extensive warehousing network across the country. Warehouses are strategically located in rural hubs, cities, ports, and near railway stations to ensure efficient storage and distribution.

Food Corporation of India (FCI)

Established on January 1, 1965, the Food Corporation of India (FCI) plays a crucial role in managing the nation’s food economy. Initially operating in four southern states, FCI eventually expanded its services across the entire country to ensure the equitable distribution of food grains at affordable prices, especially for the vulnerable population.

Main Functions of FCI

• Procures significant quantities of food grains and other crops at fair prices from farmers on behalf of central and state governments.
• Distributes stocks through the Public Distribution System (PDS) to keep consumer prices stable.
• Controls seasonal and regional price fluctuations by developing a wide purchasing and distribution framework.
• Maintains a buffer stock of food grains to manage emergencies and shortfalls.

Organizational Structure

FCI comprises five zonal offices, 19 regional offices, four sub-regional offices, four operational joint manager offices, and 173 district offices, supported by thousands of operational units across the country.

Key Operations of FCI

Procurement:

FCI procures food grains on behalf of central and state governments, either independently or in collaboration with other agencies. It ensures minimum support prices to farmers, thus preventing distress sales.

Transportation:

The corporation ensures efficient and large-scale movement of food grains via road and rail to meet storage and consumption demands timely.

Imports:

Since 1969-70, FCI has managed all imported food grains at major ports, ensuring their quick distribution to prevent congestion and strengthen PDS supplies.

Redistribution:

FCI allocates and distributes procured/imported food grains through around 4.43 lakh fair price shops across India, based on central government allocations.

Processing:

FCI has established 24 modern rice mills and processing units in various states, including paddy and maize driers, dhal mills, and solvent extraction plants. It also collaborates with the Tamil Nadu government and the Union Agriculture Ministry in operating a rice processing research center at Thiruvarur.

Consultancy:

FCI offers consultancy services to domestic and international clients, assisting in the modernization of rice mills and other agro-processing units. Services include feasibility studies, technical consultancy, management optimization, and market analysis.

Buffer Stock

Buffer stock refers to the food grain reserves maintained by the government to address supply shocks, emergency needs, and critical situations such as natural disasters, war, famine, or refugee influx.

Benefits of FCI

1. Stabilizes food grain prices by neutralizing the impact of hoarding and speculative trading.
2. Protects farmers from price crashes during surplus production seasons.
3. Ensures food security and stability in the national food economy through buffer stock maintenance.

Commission for Agricultural Costs and Prices (CACP)

The Agricultural Price Commission (APC) was founded in 1965 based on the recommendations of the Foodgrains Policy Committee, led by L.K. Jha. Its primary purpose was to guide the government on agricultural pricing policies, considering the welfare of both farmers and consumers. In 1985, the APC was renamed as the Commission for Agricultural Costs and Prices (CACP), aligning its identity with that of industrial pricing bodies. CACP is a statutory body functioning under the Ministry of Agriculture and Farmers Welfare, Government of India, headquartered in New Delhi. The current chairman is Vijay Paul Sharma.

Price Fixation by the Government

The government fixes various prices to regulate agricultural production and ensure fair returns for farmers while protecting consumer interests. These prices include:

• Minimum Support Prices (MSP)
• Statutory Minimum Prices (SMP)
• Procurement Prices
• Issue Prices

The key objectives of price fixation include:

1. Directing resources toward the production of essential crops
2. Ensuring reasonable income for farmers
3. Encouraging investment in agriculture
4. Safeguarding the interests of low-income consumers
5. Maintaining price stability in the market

CACP submits seasonal price recommendations separately for Kharif and Rabi crops. The Government of India finalizes the administered prices after reviewing CACP’s report, inputs from state governments, and the demand-supply status of commodities.

Factors Considered by CACP

While recommending prices, the CACP evaluates the following factors:

• Production cost
• Input cost variations
• Input-output price balance
• Market price trends
• Inter-crop price balance
• Demand and supply scenario
• Impact on industrial costs
• Effect on inflation
• Impact on cost of living
• Domestic and global price comparisons

Currently, CACP suggests MSPs for 23 crops, which include:

• 7 cereals: Paddy, wheat, maize, sorghum, pearl millet, barley, ragi
• 5 pulses: Gram, tur, moong, urad, lentil
• 7 oilseeds: Groundnut, mustard-rapeseed, soybean, sesame, sunflower, safflower, nigerseed
• 4 commercial crops: Copra, sugarcane, cotton, raw jute

Types of Administered Prices

These are government-fixed prices intended to shield farmers from drastic price drops and consumers from unaffordable prices. They help ensure food security and procurement for public distribution. The types include:

1. Minimum Support Price (MSP):

This is a pre-determined price at which the government guarantees to purchase crops from farmers, especially during years of bumper production. It acts as a safety net and is announced twice annually before Kharif and Rabi seasons.

2. Statutory Minimum Price (SMP):

Applicable to sugarcane, this is a legally enforceable minimum price. Sugar factories are mandated to pay at least this price, making it illegal to offer any price below the SMP.

3. Procurement Price:

This is the rate at which the government buys agricultural produce to maintain buffer stocks and support the Public Distribution System (PDS). Usually announced before harvest, it is slightly above the MSP but below prevailing market prices. Unlike MSP, government procurement at this price is discretionary unless made compulsory under a levy system.

4. Issue Price:

This is the selling price of food grains at fair price shops under the PDS. It is designed to be affordable for consumers, especially those below the poverty line, and is set above the procurement price.

Directorate of Marketing and Inspection (DMI): Genesis, Objectives, and Functions

The Directorate of Marketing and Inspection (DMI) is an attached office under the Department of Agriculture, Cooperation and Farmers Welfare, Ministry of Agriculture & Farmers Welfare. It was established in 1935 with the aim of implementing agricultural marketing policies and programs for the structured development of agricultural and allied produce marketing across India. The DMI plays a key role in protecting the interests of both farmers and consumers and acts as a vital link between Central and State governments.

The DMI is headed by the Agriculture Marketing Adviser to the Government of India. Its headquarters is located in Faridabad (Haryana), with a branch head office in Nagpur (Maharashtra). It also operates 11 regional offices located in Delhi, Mumbai, Chennai, Kolkata, Hyderabad, Chandigarh, Jaipur, Lucknow, Bhopal, Kochi, and Guwahati. Additionally, the Central Agmark Laboratory is situated in Nagpur, and the DMI has 27 sub-offices along with 11 Regional Agmark Laboratories (RALs) throughout the country.

Main Functions of DMI

1. Advisory Role: Offers guidance on the regulation, development, and management of agricultural produce markets across States and Union Territories.
2. Standardization and Grading: Promotes the standardization and grading of agricultural and allied products under the Agricultural Produce (Grading and Marking) Act, 1937.
3. ISAM Implementation: Facilitates the promotion and implementation of the Integrated Scheme of Agricultural Marketing (ISAM).
4. MRIN Development: Develops and implements the Agricultural Marketing Research and Information Network (MRIN) sub-scheme.
5. AMI Execution: Executes the Agricultural Marketing Infrastructure (AMI) sub-scheme to improve market facilities.
6. Marketing Reforms: Supports reforms in the agricultural marketing sector.
7. Training: Provides training to professionals involved in agricultural marketing.
8. Marketing Extension: Engages in extension activities to spread awareness and knowledge about market operations and practices.

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