Rural Go Down Evaluation

EVALUATION OF

CENTRAL SECTOR SCHEME OF

CONSTRUCTION OF RURAL GODOWNS

Submitted by:

Global Agri System Pvt. Ltd. K-13A, Hauz Khas EnclaveNew Delhi -110 016Tel.: 2652 7123/35 Fax: 2656 8510E-mail: [email protected]

Submitted to:

Department of Agriculture & Co-operationMinistry of Agriculture, Government of IndiaKrishi Bhawan, New Delhi

Submitted by:

Global Agri System Pvt. Ltd. K-13A, Hauz Khas EnclaveNew Delhi -110 016Tel.: 2652 7123/35 Fax: 2656 8510E-mail: [email protected]

Submitted to:

Department of Agriculture & Co-operationMinistry of Agriculture, Government of IndiaKrishi Bhawan, New Delhi

JULY, 2006

EVALUATION OF CENTRAL SECTOR SCHEME OF

CONSTRUCTION OF RURAL GODOWNS

Evaluation of Central Sector Scheme of Global AgriSystem Private Limited Construction of Rural Godowns Your Partner in Agri-business

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TABLE OF CONTENTS

1 EXECUTIVE SUMMARY........................................................................................................................................1 2 INTRODUCTION .......................................................................................................................................................5 3 METHODOLOGY FOLLOWED TO MEET THE REQUIREMENTS OF THE ASSIGNMENT ....7 4 KEY FINDINGS FROM THE EVALUATION STUDY................................................................................13

4.1 DISTRIBUTION OF RURAL GODOWNS............................................................................................................... 13 4.1.1 Basis of Findings...........................................................................................................................................18

4.1.1.1 Selection of NABARD Assisted Godowns for the Evaluation Study .................................................... 18 4.1.1.2 Selection of NCDC Assisted Godowns for the Evaluation Study.......................................................... 19

4.2 EXTENT TO WHICH THE OBJECTIVES OF THE RURAL GODOWNS SCHEME WERE MET .............................. 20 4.3 PROFILE OF GODOWN OWNERS........................................................................................................................ 27 4.4 EXTENT TO WHICH FARMERS HAVE BENEFITED FROM THE SCHEME.......................................................... 33 4.5 STATUS OF COMPLETION OF STORAGE PROJECTS AND THEIR OPERATIONAL STATUS ............................ 33 4.6 ROLE OF RURAL GODOWNS IN HELPING THE RURAL ECONOMY................................................................. 36 4.7 EFFECTIVENESS OF THE TRAINING & AWARENESS PROGRAMMES CONDUCTED UNDER THE SCHEME.. 38 4.8 QUALITY OF CONSTRUCTION............................................................................................................................ 40 4.9 REGIONAL IMBALANCE IN THE CONSTRUCTION OF RURAL GODOWNS........................................................ 43 4.10 WEAK MANAGEMENT INFORMATION SYSTEMS............................................................................................. 44 4.11 ROLE OF NGOS ................................................................................................................................................... 45 4.12 TRENDS IN INDIAN AGRICULTURE.................................................................................................................... 45

5 SUGGESTIONS & RECOMMENDATIONS....................................................................................................52 5.1 EXPANSION OF THE SCHEME BEYOND 2006-2007 ......................................................................................... 52 5.2 IMPROVED MIS ................................................................................................................................................... 53 5.3 EXPANDING THE SCOPE FOR TRAINING & AWARENESS ............................................................................... 54

5.3.1 Involving NGOs in Awareness Creation and Training...........................................................................55 5.3.2 Suggested Training Modules.......................................................................................................................56 5.3.3 Training Institutions:....................................................................................................................................56 5.3.4 Awareness creation.......................................................................................................................................57 5.3.5 Meetings with Local Community Leaders / Ongoing Initiatives...........................................................57


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LIST OF TABLES :

TABLE 1 FIELD SURVEY SCHEDULE..................................................................................................................................... 11 TABLE 2 STATEMENT SHOWING PROGRESS OF RURAL GODOWN SCHEME................................................................... 15 TABLE 3 DISTRIBUTION OF RURAL GODOWNS ACROSS THE COUNTRY ......................................................................... 17 TABLE 4 CAPACITY WISE DISTRIBUTION OF NABARD ASSISTED RURAL GODOWNS IN THE 15 TATES THAT

COMPRISE 99% OF THE TOTAL STORAGE CAPACITIES CREATED IN THE COUNTRY THROUGH THE RURAL GODOWNS SCHEME ...................................................................................................................................................... 18

TABLE 5 CAPACITY WISE DISTRIBUTION OF THE SAMPLES OF GODOWNS SELECTED FOR THE STUDY.................... 19 TABLE 6 CAPACITY WISE DISTRIBUTION OF THE SAMPLES OF GODOWNS SELECTED FOR THE STUDY.................... 20 TABLE 7 EXTENT TO WHICH THE RURAL GODOWNS SCHEME HAS MET ITS OBJECTIVES............................................ 22 TABLE 8 REASONS BEHIND THE RURAL GODOWNS SCHEME BEING UNABLE TO MEET SOME OF THE OBJECTIVES OF

THE SCHEME .................................................................................................................................................................. 26 TABLE 9 COMMODITY WISE UTILIZATION OF STORAGE SPACE CREATED THROUGH THE RURAL GODOWNS SCHEME

......................................................................................................................................................................................... 34 TABLE 10 PRICE RISE............................................................................................................................................................. 36 TABLE 11 WASTAGE LEVEL.................................................................................................................................................. 37 TABLE 12 EMPLOYMENT GENERATED ................................................................................................................................ 38 LIST OF FIGURES : FIGURE 1 STATE WISE DISTRIBUTION OF STORAGE CAPACITY......................................................................................... 14 FIGURE 2 STATE WISE DISTRIBUTION OF GODOWNS POPULATION................................................................................... 14 FIGURE 3 OCCUPATION OF THE GODOWN OWNERS.......................................................................................................... 29 FIGURE 4 EDUCATION PROFILE OF GODOWN OWNERS .................................................................................................... 30 FIGURE 5 CASTE PROFILE OF GODOWN OWNERS.............................................................................................................. 31 FIGURE 6 EXTENT OF LAND HOLDING OF THE GODOWN OWNERS................................................................................. 32 FIGURE 7 FOODGRAIN PRODUCTION (MILLION TONS)...................................................................................................... 45 FIGURE 8 COTTON / OILSEED / SPICES PRODUCTION........................................................................................................ 46 FIGURE 9 STORAGE GAP (CAGR)........................................................................................................................................ 48


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1 EXECUTIVE SUMMARY

Gramin Bhandaran Yojana scheme was launched by Department of Agriculture & Co-

operation in 2001 with multi fold objectives. The scheme has till 31st March 2005 sanctioned

9483 projects with capacity of 14.18 MMT of which more than 80% of godowns are

operational.

Department of Agriculture & Co-operation commissioned Global AgriSystem Private

Limited to evaluate the Gramin Bhandaran Yojana scheme. The findings of the study

conducted through primary interviews of 970 godown owners across 15 states clearly shows

that the scheme has been successful in fulfilling its multiple objectives of creating scientific

storage infrastructure for the various stakeholders, developing farmers storages, creating

employment and economic value and bringing in private investment to the agricultural

sector.

Sanctioned projects include new projects in the private, government and co-operative

sectors and renovation of co-operative sector projects. New projects account for 8061 (85%)

& 12.26 MMT (86%) of capacity, renovated projects NCDC account for 1422 (15%) and 1.92

MMT (14%) of capacity. NABARD’s share of new projects is 7107 (88%) with capacity of

11.36 MMT (93%) while NCDC’s share of new projects is 954 (12%) with capacity of 0.90

MMT (7%).

REGIONAL DISTRIBUTION OF GODOWNS : Region Share of projects Major states North 44.0 % Punjab South 16.4 % Karnataka West 16.4 % Maharashtra East 11.0 % Chhatisgarh, West Bengal Central 09.7 % Madhya Pradesh North East < 1.0 % Assam, Meghalaya Union Territories 0.02 %

15 states, namely, Andhra Pradesh, Karnataka, Tamil Nadu, Maharashtra, Gujarat,

Rajasthan, Madhya Pradesh, Chhatisgarh, Orissa, Bihar, West Bengal, Assam, Punjab,

Haryana & Uttar Pradesh account for almost 99% of the total storage sanctioned while 7

states of Punjab, Andhra Pradesh, Haryana, Madhya Pradesh, Maharashtra, Uttar Pradesh

and Chhatisgarh account for 73% of godowns and 88% of capacity. District wise

concentration of godowns seen for e.g. Nadia in West Bengal, Ferozepur & Bhatinda in

Punjab, Rajkot in Gujarat, Hoshangabad in Madhya Pradesh, Akola in Maharashtra, Ganjam

in Orissa


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Major Findings § Scheme usage has been driven by a combination of the awareness programs

conducted by NIAM & DMI, local canvassing by state offices and as well as by banks

selling loans.

§ The Scheme has been successful particularly in the development of small and medium

godowns, 76% (<1000 MT), 13% (1000 ~ 5000 MT) and 11% (>5000 MT) in the

NABARD assisted scheme

§ Godown construction quality across NABARD and NCDC assisted godowns meets

standards laid down on major quality parameters

§ 95% of godowns are used to store agricultural output, only 5% store both input

and output

§ Commodities stored are mainly local produce, While the major commodity stored is

rice, wheat and pulses, variations to this are being seen in other states for commercial

commodities such as spices (Andhra Pradesh, Madhya Pradesh, Karnataka, Rajasthan)

soy (Madhya Pradesh), cotton (Maharashtra, Gujarat, Tamil Nadu, Andhra Pradesh)

and groundnut (Gujarat, Tamil Nadu, Andhra Pradesh) and for Non Timber Forest

Produce reported from Chattisgarh and Madhya Pradesh

§ Godown owners are predominantly farmers (70%) followed by traders, business

houses and other categories.

§ Owners include high school and college graduates belonging to the general caste

and own land between 1 ~ 10 acres (majority)

§ Godown owners have benefited from the scheme through reducing post harvest losses,

increasing income through higher price realization of a reported 5 ~ 15 % and enabling

both savings and investment capability. Godown owners report employment creation as

per godown sizes

Achievements While principal objectives of Gramin Bhandaran Yojana Scheme have been met like

creation of scientific storage capacity, prevention of distress sale, reduction of loss in

quantity and quality, creation of additional employment opportunities in rural areas,

assistance in the easy procurement of food grains by FCI and other agencies, renovation

and upgradation of existing storage capacity created by co-operatives with the assistance

of NCDC, encouraging private and co-operative sector investment in the creation of

storage infrastructure in the major producing zones and the major consumption zones in the

country and reduction in pressure on existing storage facilities with public agencies


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and co-operatives and reduction in pressure on the transport system in the post-

harvest period.

Objectives which have not been met like, promotion of grading, standardization and

quality control of agricultural produce to improve their marketability which are being

addressed through separate schemes, timely availability of fertilizers, pesticides,

inputs, consumer articles, etc. to farmers which is being done through separate trade

channels, providing the facility of pledge loan and marketing credit which are not

availed by farmers due to procedural issues as well lack of knowledge and introduction of

a national system of warehouse receipts in respect of agricultural commodities stored in

such godowns which are issued by MCX & NCDEX in the godowns hired and organized by

them

Based on the findings of the field survey, secondary data and detailed interaction with DMI,

NABARD, NCDC, stakeholders, and beneficiaries, consultants have made the following

suggestions.

Suggestions § Scheme continuation has to be considered in view of 100 MMT storage gap based on

production and storage estimates. Scheme potential can be estimated for foodgrain and

conventional crops as well as for other crops and in states where the scheme limit is

available using a local approach

§ Scheme may incorporate provision for modern storage technology alternatives such as

silos, whether large scale or farm / co-operative scale since the first large scale project

for foodgrain is being implemented and will be operational for FCI usage. Scheme may

consider review of cost of construction of godowns given the rise in the costs as well as

for region based considerations for commodity specific storage

§ Scheme may incorporate scope for enabling Warehouse Receipt System for godowns to

upgrade to NCDEX / MCX godown standards based on standards of construction,

infrastructure, equipment and utility specified

§ Scheme may consider training through NIAM for godown operation, quality management

and warehouse maintenance, crop specific storage practices, grading, standardization

and value addition as well as business practices apart from the proposed WRS and silo

storage technology. Godown owners and operators will stand to benefit if NIAM is

enabled to offer training and awareness programs on a country wide basis, to gain

efficiency in current operations as well as have the capability to upgrade to WRS / silo

based systems


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§ Scheme related training may be implemented by NIAM through a de-centralized Master

Training Approach using state specific resources, specialist training and R&D

organizations as well as the national commodities exchanges

§ Scheme has developed a valuable resource base of small, medium and large farmers

alongwith co-operatives, state enterprise and private enterprise spread across the

country which can be developed for future schemes and for piloting any projects in the

agricultural sector

§ DAC may consider incorporating a data compliance condition with implementing

agencies for enabling a robust MIS


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2 INTRODUCTION

The Central Sector Scheme for Construction of Rural Godowns was launched by the

Department of Agriculture and Co-operation (DoAC) in the year 2001. The objectives that

the scheme sought to meet were:

§ Creation of a scientific storage capacity to meet the various requirements of farmers for

storing farm produce, processed farm produce, consumer articles, agricultural produce,

etc.

§ Promotion of grading, standardization and quality control of agricultural produce to

improve their marketability.

§ Timely availability of fertilizers, pesticides, inputs, consumer articles, etc. to farmers.

§ Prevention of distress sale of food grains and other agricultural produce, immediately

after harvest by providing the facility of pledge loan and marketing credit.

§ Reduction of loss of quantity and quality arising at present from storage in sub-standard

godowns

§ Reduction in the pressure on existing storage facilities with public agencies, co-

operatives, etc., particularly during the post harvest period of peak demand.

§ Reduction in the pressure on the transport system in the post-harvest period.

§ Creation of additional employment opportunities in rural areas.

§ Assistance in the easy procurement of food grains by FCI and other agencies.

§ Renovation and upgradation of existing storage capacity created by Co-operatives with

the assistance of NCDC.

§ To strengthen the agricultural marketing infrastructure of the country by paving the way

for the introduction of a national system of warehouse receipts in respect of agricultural

commodities stored in such godowns; and

§ To reverse the declining trend of investment in the agriculture sector by encouraging

private and co-operative sector investment in the creation of storage infrastructure in the

country.

In July 2005, the DoAC awarded M/s Global AgriSystem Pvt. Ltd. (hereafter referred to as

‘the Consultants’) the contract to evaluate the performance of the Scheme on various

parameters. As per the Terms of Reference (ToR) for the assignment, the Consultants were

specifically required:

§ To assess the utility of the scheme in terms of its objectives.

§ Profile the entrepreneurs who have availed the benefit for construction of rural godowns

(i.e. Farmers, Traders, Co-operatives, Corporations, NGOs, etc.)


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§ To understand the extent to which farmers, especially small farmers, have benefited

from the Scheme in terms of (a) Construction of own godowns, (b) Utilization of the

Storage Space, (c) Reduction of wastages, (d) Accessing credit, and (e) Realizing

remunerative prices for their produce.

§ To assess the status of completion of storage projects, their operational status -- (a)

Capacity wise and commodity wise break up, (b) Utilization/Occupancy Pattern, (c)

Storage Charges, etc. -- and economic performance

§ To help understand the extent to which the operation of these godowns have helped the

rural economy by way of investment, rural employment and rural marketing.

§ To assess the effectiveness of training and awareness programs conducted for the

bankers, entrepreneurs and farmers through the National Institute of Agricultural

Marketing (NIAM), Jaipur

§ To assess the quality of construction of the godowns with specific reference to the

general conditions laid down in the operational guidelines for the scheme of scientific

construction; and

§ To gauge the reasons for the regional imbalance in the construction of godowns under

the scheme and suggestions for improvements in the scheme with reference to its

objectives.

This report, the Report for the assignment contains the analysis of the findings from the

study and recommendations for improvements in the scheme.

The remaining part of the report is structured as follows:

Section 2 : Describes the methodology followed by the Consultants to meet the

requirements of the Study, the sampling plan, etc.

Section 3 : Contains the Summary of key findings from the Study and the analysis of the

findings

Section 4 : Contains the key suggestions and recommendations for the improvement of

the Scheme


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3 METHODOLOGY FOLLOWED TO MEET THE REQUIREMENTS OF THE

ASSIGNMENT

To meet the requirements of the assignment, the consultants undertook the following tasks

as their methodological approach.

Task 1 : Briefing Meeting of the Team Members with DMI Officials in Faridabad and

NCDC Officials in New Delhi On being awarded the contract, the members from the consulting team met the concerned

officials at DMI in Faridabad. The purpose of the meeting was : § To introduce the members of the consulting team to the DMI representatives,

§ Discuss the proposed methodological approach with the DMI officials and seek their

inputs for the same

§ Discuss the secondary data requirements from DMI

§ Outline a field work schedule, and

§ Seek any other assistance from the DMI officials in Faridabad and other states

At the time when the contract was awarded to the consultants, it was understood that the

assignment involved evaluating a statistically representative sample from 5,325 projects

sanctioned upto FY 2003-04 across 24 States and one Union Territory of the country. These

projects were broken down into 4,399 NABARD assisted construction of new rural godowns,

926 NCDC assisted construction of new godowns and 1,120 NCDC assisted renovation of

existing godowns.

In the briefing meeting however, DMI requested the consultants to evaluate a statistically

representative sample of the godowns sanctioned upto FY 2004-2005. The sample frames

of the numbers of godowns to be thus evaluated went up from 5,325 to 9,483. The breakup

of this universe was: 7,107 NABARD assisted new godowns, 954 NCDC assisted new

godowns and 1,422 NCDC assisted renovation of old godowns. The consultants agreed to

do the needful.

A meeting with similar objectives was also held with representatives from NCDC in New

Delhi.


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Task 2 : Collection & Analysis of Secondary Information Immediately after meeting the DMI and NCDC representatives, the consultants began the

task of collecting secondary information on the scheme. The sources from which information

was collected included – DMI, NCDC; NABARD; FCI; DoAC;. The nature of information

sought to be collected included:

§ State wise distribution of godowns across the country (in terms of numbers of godowns

per state, size of the godowns, year-wise and capacity-wise no. of godowns sanctioned,

etc)

§ Guidelines related to the construction of godowns

§ Nos. of godowns hired by FCI and other agencies from FY 2001-2002 to FY 2004 –

2005, etc.

The nature of information collected above would have enabled the consultants to develop a

robust fieldwork schedule and meet one of the key requirements of the assignment –

namely, to have statistically relevant samples chosen for the purpose of the field study.

It must however be mentioned that the information sought from DMI was not immediately

available with NABARD and NCDC. The consultants were asked to co-ordinate with the

NABARD Office in Mumbai and its Headquarters in Mumbai and NCDC (in Delhi) to collect

this information. However, on making visits to the NABARD offices in Mumbai and Pune, the

consultants were informed that the information would only be available with the Regional

Offices of NABARD and that the consultants would have to visit these offices, should they

want the information to be made available to them. The NCDC office on the other hand

informed the consultants that the kind of information needed was not available with their

office. Hence, the consultants would need to visit each State, get in touch with the NCDC

representatives in the State headquarters and select the godowns for the purpose of the

evaluation survey on the basis of data available with state offices.

This feedback was passed on to DMI and DMI assured the consultants that they would

provide as much assistance as could be possible to procure the data. Thereafter, the

required information received from NCDC, NABARD and DMI state offices was supplied to

the consultants. However, the information supplied was not in any standardized formats and

each of the states that supplied the information did so on different formats. Moreover, some

of the information was supplied in hard copies while some other states provided soft copies.


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Task 3 : Developing Questionnaire Formats for Recording Primary Information from

the Field Surveys

On getting part of the information from the states, the Consultants began developing

questionnaire schedules for collecting primary information from the field surveys.

The first drafts of these questionnaire schedules were then taken to the DMI office in

Faridabad where the consultants sought inputs and suggestions from the DMI officials on

the questionnaire schedules.

The suggestions provided by DMI on the questionnaire schedules were incorporated and a

second draft of the schedules was prepared.

Task 4 : Developing the Sampling Plan and the Associated Fieldwork Schedules Whilst preparing the questionnaire schedules, the consultants also started work on

developing the sampling plan and the fieldwork methodologies. For preparing the sample

plan, the consultants depended wholly on the secondary information collected from DMI.

The following steps were followed in the stratification process:

§ A complete table of Rural Godowns was collected from the DMI with cut off date as 31st

March 2005 i.e. all the godowns approved till 31.03.2005 were considered.

§ Thereafter the Consultants segmented the godowns into three broad areas for the

purpose of the study. These three segments were:

- NABARD assisted new godowns

- NCDC assisted renovated godowns

- NCDC assisted new godowns

§ After this stratification, the NABARD and NCDC assisted godowns were further

segregated on the basis of their total capacities (for e.g. Small (less than 1000 MT),

Medium (between 1000 to 5000 MT) and Large (more than 5000 MT) capacities

§ The total sample size was proportionately divided into these six segments as per their

weight (total no of godowns funded).

§ Once this is done the three broad segments (i.e. NABARD assisted new godowns,

NCDC assisted renovated godowns and NCDC assisted new godowns) were treated

separately for further sampling. However the base was kept constant for each segment.

§ The sample for each segment was distributed again to various states on the basis of the

proportionate weight of each state. For e.g. If 25% of the total Godowns assisted by

NABARD were located in Punjab then 25% representation was given to Punjab in total

sample of NABARD assisted godowns, and so on.


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§ Thereafter, the sampling was done using Area sampling and random sampling

techniques.

§ Total no of godowns in each district of a state was plotted on the map of the particular

state and various high-density clusters were identified.

§ The entire district falling under this cluster was taken for further sampling. Again the

sample was distributed within these districts on the basis of proportionate weight. Once

the samples for each district were decided, the respondents were thereafter selected on

the purely random basis.

Task 4 : Meeting with DoAC Officials in Krishi Bhavan, New Delhi The second draft of the questionnaire schedules, the sampling plan, fieldwork methodology

and the tentative fieldwork schedule was discussed with DoAC officials. The consultants

also mentioned the problems in collecting secondary data and the consequent delays in

launching the fieldwork. DoAC then instructed the DMI to provide the required secondary

information to the consultants at the earliest and requested the consultants to test the

questionnaires before administering them on a large scale in the field.

Task 5 : Pilot Testing the Questionnaire Schedules in Punjab After the meeting with DoAC and DMI officials, the consultants attempted to pilot test the

second draft of the questionnaires and the fieldwork methodology in a couple of randomly

selected districts in Punjab. The pilot testing was done on the 26th and 27th of July, 2005. A

preliminary report on the experience of the consultants during the piloting exercise was

prepared and submitted to DoAC and DMI on the 29th of July 2005. This report is included

in Annex II of this report.

On the basis of the preliminary report, DoAC once again instructed DMI to provide the

consultants with the required information and field support. DMI agreed to do so and once

again assured the consultants that all necessary assistance would be provided.

The questionnaire schedules were also refined based on the piloting of the questionnaires

and the same were submitted to DMI and DoAC for their approval. Similarly, the fieldwork

methodology and the sample sizes were also fine-tuned (basis the available secondary

data), finalized and shared with both DMI and DoAC. The final sample plan based on which

the fieldwork for the assignment was carried out and the final questionnaires for primary

data collection are provided in Annex III and Annex IV respectively of this report.


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Task 6 : Constituting the Field Work Teams and Briefing Meeting with Field

Supervisors and Field Investigators

On acceptance of the final questionnaires and the sample plan, the field teams were

gathered in Delhi and a briefing meeting was held for the field research team on the 29th of

September 2005. Officials from DMI and NCDC provided the field teams with a broad

overview of the Central Sector Scheme for Construction/Renovation of Rural Godowns and

briefed the field teams on the objectives of the assignment. Thereafter wide ranging

discussions were held to respond to the queries raised by the field research team, the team

was briefed on the tasks that they would need to carry out during the primary information

gathering exercise and other critical field support related issues were discussed and agreed

upon.

Task 7 : Primary Data Collection Exercise After the briefing meeting, the fieldwork for the assignment commenced. During the

fieldwork, face-to-face interviews were held with godown owners/ representatives of the

godown owners and farmers in the vicinity of the godowns. The field teams also physically

inspected the godowns. The responses provided by the respondents and the observations

of the field investigation teams were recorded in the questionnaires.

The actual fieldwork schedule is contained in Table 1 below:

Table 1 Field Survey Schedule

REGION / STATE Field Survey Start Date Field Survey End Date

NORTH Punjab 3/10/05 2/12/05 Haryana 24/10/05 15/11/05 Uttar Pradesh 17/10/05 28/11/05 Chattisgarh 02/11/05 14/11/05 Rajasthan 24/10/05 15/11/05 CENTRAL

Madhya Pradesh 3/10/05 21/11/05 SOUTH

Karnataka 18/10/05 21/11/05 Andhra Pradesh 24/10/05 24/11/05 Tamil Nadu 2/12/05 15/12/05 EAST

West Bengal 24/10/05 25/11/05 Orissa 24/10/05 10/11/05 Assam 1/11/05 20/11/05 Bihar 29/11/05 2/12/05 WEST

Maharashtra 3/10/05 15/11/05 Gujarat 24/10/05 24/11/05


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It must be noted that on account of festivals like Durga Puja and Diwali, and Acts of God like

heavy rainfall and floods in many places, the fieldwork in many states got delayed. The

reasons behind these delays and the alternate remedial plans were discussed and agreed

upon with DMI. During the course of the fieldwork, DMI officials from both its respective

regional offices as well as the DMI head office in Faridabad provided the field research

teams with the required/requested assistance. For this, the consultants are grateful to DMI.

Task 8 : Data Entry, Analysis of Primary and Secondary Data and Report Writing The information gathered from the field was entered into computers and analyzed using the

statistical software application package, SPSS, and other quantitative and qualitative

analytical tools and techniques. Thereafter, the task of report writing began. This document

and its annexes are the outcome of the exercise.


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4 KEY FINDINGS FROM THE EVALUATION STUDY

4.1 Distribution of Rural Godowns As on 31.03.2005, the state-wise distribution of Rural Godowns created by DMI is given in

Table 21.

It can be seen from Table 2 that 15 states, namely: § Andhra Pradesh

§ Karnataka

§ Tamil Nadu

§ Maharashtra

§ Gujarat

§ Rajasthan

§ Madhya Pradesh

§ Chhatisgarh

§ Orissa

§ Bihar

§ West Bengal

§ Assam

§ Punjab

§ Haryana; and

§ Uttar Pradesh account for almost 99% of the total storage facilities created by DMI in the country (both in

terms of numbers as well as storage capacities created). Graphic charts follow on the state

wise distribution of godowns and storage capacity created.

1 Source: DMI


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Capacity DistributionAssam, 0.52% Bihar, 0.12%

Others, 0.54%

Rajasthan, 0.41%Tamil Nadu, 0.68%

Orissa, 1.87%

West Bengal, 1.34%

Gujarat, 2.06%

Karnataka, 4.43%

Chhatisgarh, 5.44%

Madhya Pradesh, 9.37%

Maharashtra, 9.47%

Uttar Pradesh, 12.00%

Andhra Pradesh, 17.07%

Punjab, 24.67% PunjabAndhra PradeshUttar PradeshHaryanaMaharashtraMadhya PradeshChhatisgarhKarnatakaGujaratOrissaWest BengalTamil NaduAssamRajasthanBiharOthers

Figure 1 State wise distribution of storage capacity

Godowns Population

Assam, 0.56%

Others, 1.55%

Tamil Nadu, 0.51%Orissa, 0.90%

Bihar, 1.69%

Rajasthan, 1.34%

Chhatisgarh, 2.21%

Haryana, 3.45%

Gujarat, 5.57%

West Bengal, 6.92%

Andhra Pradesh, 7.13%

Karnataka, 8.36%

Uttar Pradesh, 8.88%Maharashtra, 9.49%

Madhya Pradesh, 9.66%

Punjab, 31.79%

Punjab

Madhya Pradesh

Maharashtra

Uttar Pradesh

Karnataka

Andhra Pradesh

West Bengal

Gujarat

Haryana

Chhatisgarh

Bihar

Rajasthan

Orissa

Assam

Tamil Nadu

Others

Figure 2 State wise distribution of godowns population


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Table 2 Statement Showing Progress of Rural Godown Scheme (Position as on 31/03/2005)

Sanctioned by NABARD

Sanctioned by NCDC (New)

Total new construction

Sanctioned by NCDC (Renovation)

Total

1 2 3 4 5 (3+4) 6 (5+6) S. No

State No. of projects

Capacity in tonnes

No. of projects

Capacity in tonnes

No. of projects

Capacity in tonnes

No. of projects

Capacity in tonnes

No. of projects

Capacity in tonnes

1 Andhra Pradesh 569 2412187 56 4300 625 2416487 51 4750 676 24212372 Assam 52 72781 1 650 53 73431 0 0 53 734313 Bihar 1 1000 157 16150 158 17150 2 500 160 176504 Chhatisgarh 137 415214 73 357000 210 772214 0 0 210 7722145 Gujarat 516 248026 12 44300 528 292326 0 0 528 2923266 Haryana 158 1178585 66 10500 224 1189085 103 230817 327 14199027 Himachal Pradesh 0 0 31 3600 31 3600 0 0 31 36008 Jammu & Kashmir 1 100 1 1950 2 2050 0 0 2 20509 Karnataka 751 612898 41 14825 792 627723 1 100 793 62782310 Kerala 8 4917 27 8950 35 13867 8 1570 43 1543711 Madhya Pradesh 631 1163833 165 93050 796 1256883 120 72616 916 132949912 Maharashtra 742 924651 29 157500 771 1082151 129 261300 900 134345113 Meghalaya 1 7983 34 3450 35 11433 3 300 38 1173314 Nagaland 1 4000 0 0 1 4000 0 0 1 400015 Orissa 85 264820 0 0 85 264820 0 0 85 26482016 Punjab 2788 3110302 14 1790 2802 3112092 213 386350 3015 349844217 Rajasthan 18 50998 27 3000 45 53998 82 4700 127 5869818 Tamil Nadu 25 83397 21 12000 46 95397 2 600 48 9599719 Uttar Pradesh 64 602827 85 143600 149 746427 693 955468 842 170189520 Uttaranchal 9 23762 21 13950 30 37712 0 0 30 3771221 West Bengal 550 179215 91 9100 641 188315 15 1500 656 18981522 U Ts 0 0 2 1400 2 1400 0 0 2 1400 Total 7107 11361496 954 901065 8061 12262561 1422 1920571 9483 14183132


16

The state wise contribution to the total storage facilities created is given in Table 3. As can

be seen from Table 3, approximately 7 states account for the largest share of the total

numbers and capacities of storage facilities created across the country. These states are:

§ Punjab (31.79% of the numbers and 24.67% of the total storage facilities created)

§ Andhra Pradesh (7.31% of the numbers and 17.07% of the total storage facilities

created)

§ Haryana (3.45% of the numbers and 10.01% of the total storage facilities created)

§ Madhya Pradesh (9.66% of the numbers and 9.37% of the total storage facilities

created)

§ Maharashtra (9.49% of the numbers and 9.47% of the total storage facilities created)

§ Uttar Pradesh (8.88% of the numbers and 12% of the total storage facilities created);

and

§ Chhatisgarh (2.21% of the numbers and 5.44% of the total storage facilities created)

Interestingly, 3 states account for a larger share of the numbers of godowns created and not

so much for their share in the total capacities created. These states are:

§ Karnataka (8.36% of the numbers and 4.43% of the total storage facilities created)

§ West Bengal (6.92% of the numbers and 1.34% of the total storage facilities created)

§ Gujarat (5.57% of the numbers and 2.06% of the total storage facilities created)


17

Table 3 Distribution of Rural Godowns across the Country

Sanctioned by NABARD Sanctioned by NCDC (New)

Total New Godowns Sanctioned by NCDC (Renovation)

Total No. of Rural Godowns

1 2 3 4 5 (=3+4) 6 7 (=5+6) S. No State % of Total

No. of Projects

% of Total Capacity Created

% of Total No. of

Projects


% of Total No. of

Projects


% of Total No. of

Projects


% of Total No. of

Projects


1 Andhra Pradesh 8.01 21.23 5.87 0.48 7.75 19.71 3.59 0.25 7.13 17.072 Assam 0.73 0.64 0.10 0.07 0.66 0.60 0.00 0.00 0.56 0.523 Bihar 0.01 0.01 16.46 1.79 1.96 0.14 0.14 0.03 1.69 0.124 Chhatisgarh 1.93 3.65 7.65 39.62 2.61 6.30 0.00 0.00 2.21 5.445 Gujarat 7.26 2.18 1.26 4.92 6.55 2.38 0.00 0.00 5.57 2.066 Haryana 2.22 10.37 6.92 1.17 2.78 9.70 7.24 12.02 3.45 10.017 Himachal Pradesh 0.00 0.00 3.25 0.40 0.38 0.03 0.00 0.00 0.33 0.038 Jammu & Kashmir 0.01 0.00 0.10 0.22 0.02 0.02 0.00 0.00 0.02 0.019 Karnataka 10.57 5.39 4.30 1.65 9.83 5.12 0.07 0.01 8.36 4.4310 Kerala 0.11 0.04 2.83 0.99 0.43 0.11 0.56 0.08 0.45 0.1111 Madhya Pradesh 8.88 10.24 17.30 10.33 9.87 10.25 8.44 3.78 9.66 9.3712 Maharashtra 10.44 8.14 3.04 17.48 9.56 8.82 9.07 13.61 9.49 9.4713 Meghalaya 0.01 0.07 3.56 0.38 0.43 0.09 0.21 0.02 0.40 0.0814 Nagaland 0.01 0.04 0.00 0.00 0.01 0.03 0.00 0.00 0.01 0.0315 Orissa 1.20 2.33 0.00 0.00 1.05 2.16 0.00 0.00 0.90 1.8716 Punjab 39.23 27.38 1.47 0.20 34.76 25.38 14.98 20.12 31.79 24.6717 Rajasthan 0.25 0.45 2.83 0.33 0.56 0.44 5.77 0.24 1.34 0.4118 Tamil Nadu 0.35 0.73 2.20 1.33 0.57 0.78 0.14 0.03 0.51 0.6819 Uttar Pradesh 0.90 5.31 8.91 15.94 1.85 6.09 48.73 49.75 8.88 12.0020 Uttaranchal 0.13 0.21 2.20 1.55 0.37 0.31 0.00 0.00 0.32 0.2721 West Bengal 7.74 1.58 9.54 1.01 7.95 1.54 1.05 0.08 6.92 1.3422 U Ts 0.00 0.00 0.21 0.16 0.02 0.01 0.00 0.00 0.02 0.01


18

The distribution of godowns as shown in Table 4 indicates the size wise distribution of

godowns across the various states; that in some states there is a dominance of large sized

godowns whereas in others a dominance of small and medium scale godowns. The table

further depicts the dominance of total share of space created and by sector i.e., in the

private and co-operative sectors.

The capacity wise distribution of NABARD assisted rural godowns2 in the 15 states that

account for 99% of the storage capacities created under the rural godowns scheme is given

in Table 4 below:

Table 4 Capacity wise Distribution of NABARD Assisted Rural Godowns in the 15 tates that comprise 99% of the Total Storage Capacities Created in the Country through the Rural Godowns Scheme State 5000MT and

above % 1000 to

4999MT % Less than

1000MT % Total

Andhra Pradesh 371 58 210 33 58 9 639 Assam 3 6 17 33 31 61 51 Chattisgarh 26 25 66 62 14 13 106 Gujarat 9 2 22 4 468 94 499 Haryana 90 57 27 17 42 26 159 Karnataka 34 5 44 7 587 88 665 Maharashtra 47 7 98 14 561 79 706 MP 74 8 372 41 470 51 916 Orissa 13 12 56 53 37 35 106 Punjab 166 6 25 1 2640 93 2831 Rajasthan 4 27 3 20 8 53 15 Tamil Nadu 9 20 21 47 15 33 45 Uttar Pradesh 30 42 34 47 8 11 72 West Bengal 4 1 27 4 703 96 734 Table 4 accentuates the differences between the capacity wise distributions of rural

godowns in the country.

4.1.1 Basis of Findings The findings presented in the report are based on samples of NABARD and NCDC assisted

rural godowns that have been constructed in the country. Sections 3.1.1.1 and 3.1.1.2 of this

report highlights the basis of the findings.

4.1.1.1 Selection of NABARD Assisted Godowns for the Evaluation Study For the evaluation study, all the 15 states that account for 99% of the total distribution of

NABARD assisted godowns were selected. From these 15 states, a process of stratified

random sampling was followed and approximately 10% of the godowns total number of

godowns in these states was selected. The final numbers of godowns selected for the study

2 Source: DMI


19

were proportionately distributed across the total population of the godowns in these states

as per the capacity wise variations. The final capacity wise distribution of the numbers of

godowns selected across the states is presented in Table 5 below:

Table 5 Capacity Wise Distribution of the Samples of Godowns Selected for the Study

Distribution of the Sample Size across Capacities Less than 1000MT 1000 to 5000 MT More than 5000 MT

States Total No. of NABARD Assisted Rural Godowns

Sample of Godowns Selected

Sample Size as a %age of Total No. of Rural Godowns

No. of Godowns Selected

No. of Godowns Selected as a % of Total Sample Size





Punjab 2831 266 7.5 221 83.1 25 9.4 20 7.5 Haryana 159 31 19.5 13 41.9 3 9.7 15 48.4 Chattisgarh 106 29 27.4 3 10.3 20 69 6 20.7 West Bengal 734 59 8.0 55 93.2 4 6.8 0 0 Gujarat 499 50 10.0 46 92 2 4 2 4 Assam 51 15 29.4 10 66.7 3 20 2 13.3 Andhra Pradesh

639 59 9.2 12 20.3 16 27.1 31 52.5

Karnataka 665 68 10.2 58 85.3 8 11.8 2 2.9 Maharashtra 706 73 10.3 59 80.8 9 12.3 5 6.8 Uttar Pradesh 72 14 19.4 1 7.1 8 57.1 5 35.7 Orissa 106 15 14.2 5 33.3 7 46.7 3 20 Rajasthan 15 5 33.3 0 0 4 80 1 20 Madhya Pradesh

631 66 10.46 15 22.7 42 63.6 9 13.6

* Of the godowns selected in Punjab, there were 15 instances where loans had been taken and the godowns

were not constructed and neither were the amounts taken repaid and 2 instances where the amount taken as

the loan was refunded back to the banks.

4.1.1.2 Selection of NCDC Assisted Godowns for the Evaluation Study For the NCDC Assisted godowns, the capacity wise distribution of godowns in the 15 States

could not be provided by DMI and NCDC. As such, the consultants were asked to reach the

respective State Capitals and choose the respective samples of NCDC godowns in

consultation with the local DMI and NCDC officials. The consultants followed this advice and

the final list of godowns selected is provided in Table 6 below:


20

Table 6 Capacity Wise Distribution of the Samples of Godowns Selected for the Study

Distribution of the Sample Size across Capacities Less than 1000MT 1000 to 5000 MT More than 5000 MT

States Total No. of NCDC Assisted

Rural Godowns

Sample of

Godowns Selected

Sample Size as a %age of Total No. of Rural

Godowns


No. of Godowns Selected as a % of

Total Sample

Size



Total Sample

Size



Total Sample

Size Punjab 227 18 7.93 1 5.55 8 44.44 9 50 Haryana 80· 21 26.25 5 23.81 5 23.81 11 52.38 Chattisgarh 73 8 10.95 -- -- 7 87.5 1 12.5 West Bengal 106 10 9.43 10 100 -- -- -- -- Gujarat 12 3 25 2 66.67 1 33.33 -- -- Bihar 159 16 10.06 16 100 -- -- -- -- Andhra Pradesh

107 16 14.93 16 100 -- -- -- --

Karnataka 42 4 8.51 4 100 -- -- -- -- Maharashtra 158 8 5.06 1 12.5 6 75 1 12.5 Uttar Pradesh 778 53 6.81 10 18.87 33 62.26 10 18.87 Rajasthan 109 32 29.35 32 100 -- -- -- -- Madhya Pradesh

285 27 9.47 11 40.74 15 55.55 1 3.7

Tamil Nadu 23 4 17.39 3 75 1 25 -- --

As can be seen from Table 5 and 6, the total numbers of godowns selected for the

evaluation study were representative of the total distribution of godowns in the 15 states that

account for almost 99% of the total storage capacities created through the rural godown

scheme. 4.2 Extent to which the Objectives of the Rural Godowns Scheme were met As mentioned in Section 1 of this report, the various objectives with which the rural godown

scheme was initiated were:

Obj (i) : Creation of a scientific storage capacity to meet the various requirements of

farmers for storing farm produce, processed farm produce, consumer articles,

agricultural produce, etc.

Obj (ii) : Prevention of distress sale of food grains and other agricultural produce,

immediately after harvest by providing the facility of pledge loan and marketing

credit.

Obj (iii) : Reduction of loss of quantity and quality arising at present from storage in sub-

standard godowns

Obj (iv) : Reduction in the pressure on existing storage facilities with public agencies, co-

operatives, etc., particularly during the post harvest period of peak demand

Obj (v) : To strengthen the agricultural marketing infrastructure of the country by paving

the way for the introduction of a national system of warehouse receipts in respect

of agricultural commodities stored in such godowns;


21

Obj (vi) : To reverse the declining trend of investment in the agriculture sector by

encouraging private and co-operative sector investment in the creation of storage

infrastructure in the country

Obj (vii) Renovation and upgradation of existing storage capacity created by Co-

operatives with the assistance of NCDC.

Obj (viii) Creation of additional employment opportunities in rural areas.

Obj (ix) Promotion of grading, standardization and quality control of agricultural produce

to improve their marketability.

.Obj (x) Timely availability of fertilizers, pesticides, inputs, consumer articles, etc. to

farmers.

Obj (xi) Reduction in the pressure on the transport system in the post- harvest period.

and

Obj (xii) Assistance in the easy procurement of food grains by FCI and other agencies

One of the key requirements of the evaluation study was to assess the extent to which the

objectives of the scheme have been met.

From the detailed field survey, it was found that the scheme had been successful in meeting

several of its objectives. At the same time however, the scheme hasn’t been able to meet all

its objectives. The extent to which the scheme has been able to meet its objectives is

depicted in Table 7.


22

Table 7 Extent to which the Rural Godowns Scheme has met its Objectives

Objectives of the Rural Godowns Scheme States Obj (i) Obj (ii) Obj (iiii) Obj (iv) Obj (v) Obj (vi) Obj (vii) Obj (viii) Obj (ix) Obj (x) Obj (xi) Obj (xii)

Punjab 3 2 3 2 1 3 2 2 1 1 2 3 Haryana 3 2 2 2 1 2 2 2 1 1 2 2 Uttar Pradesh 3 2 2 2 1 2 2 2 1 1 2 2 Madhya Pradesh 3 3 3 3 3 3 3 2 2 1 2 3 Chhatisgarh 3 2 2 2 1 2 2 2 1 1 2 2 West Bengal 3 2 2 3 1 2 2 2 1 1 2 2 Orissa 2 2 2 2 1 1 2 2 1 1 3 3 Bihar 2 1 2 2 2 1 3 2 1 1 2 3 Assam 3 2 2 2 1 2 1 2 1 1 2 2 Rajasthan 3 1 1 2 1 2 1 1 1 3 2 2 Gujarat 3 2 1 2 1 2 1 2 1 1 2 2 Maharashtra 3 2 2 2 2 3 3 2 1 1 2 2 Andhra Pradesh 3 ** 2 3 2 3 3 2 3 2 2 3 Karnataka 3 2 2 2 1 2 2 2 2 1 2 2 Tamil Nadu 3 2 3 2 3 2 1 2 1 1 2 3

Note: In Table 7, 3 different scores have been assigned to depict the extent to which the objectives of the scheme have been met. These

scores were not assigned by the respondents, but were derived from the analysis of the responses provided to the various questions asked

to different categories of respondents (Please refer to Annex 4 for detailed questionnaires that were administered to the different

respondents). The principle of assigning the scores is as follows – A score of 3 was assigned to a particular objective when the detailed

analysis of the responses revealed that a majority of the respondents (i.e. more than 75% of the respondents) felt that the construction of the

godown had largely helped (i.e. between 75 and 100%) in meeting a particular objective. Similarly, a score of ‘2’ was assigned when the

detailed analysis of the responses revealed that a majority of the respondents felt that the construction of the godown had helped to some

extent (i.e. between 25 and 75%) in meeting a particular objective; and a score of ‘1’ was assigned when the detailed analysis of the

responses revealed that a majority of the respondents felt that the construction of the godown had not helped at all/helped, but to a very

limited extent (i.e. less than 25%) in meeting a particular objective of the scheme. For details, please refer to Annex 5 of this report


23

From Table 7, it can be seen that some states have been able to meet the objectives of the

Scheme more than the others. It can also be seen that in most of the states, some of the

key objectives of the scheme have largely been met. These are:

§ Creation of scientific storage capacity

§ Prevention of distress sale

§ Reduction of loss in quantity and quality

§ Creation of additional employment opportunities in rural areas

§ Assistance in the easy procurement of food grains by FCI and other agencies

§ Renovation and upgradation of existing storage capacity created by Co-operatives with

the assistance of NCDC; and

§ Encouraging Private and Co-operative Sector investment in the creation of storage

infrastructure in the major producing zones and the major consumption zones in the

country

Similarly, the scheme has been able to meet, albeit to a limited extent, 2 of its other

objectives. These are:

§ Reduction in pressure on existing storage facilities with public agencies and co-

operatives

§ Reduction in pressure on the transport system in the post-harvest period However, 4 sub-objectives of the scheme have largely remained unmet. These are: § Promotion of grading, standardization and quality control of agricultural produce to

improve their marketability

§ Timely availability of fertilizers, pesticides, inputs, consumer articles, etc. to farmers

§ Providing the facility of pledge loan and marketing credit.

§ Introduction of a national system of warehouse receipts in respect of agricultural

commodities stored in such godowns.


24

A brief objective explanation of the schemes objectives is detailed below:

States Creation of a scientific storage capacity

Prevention of distress sale Reduction of loss of quantity and quality

Punjab 3 2 Haryana 3 2

3 2

Uttar Pradesh 3 2 2 Madhya Pradesh

3 3 3

Chhatisgarh 3 2 2 West Bengal 3 2 2 Orissa 2 2 2 Bihar 2 1 2 Assam 3 2 2 Rajasthan 3 1 1 Gujarat 3 2 1 Maharashtra 3 2 2 Andhra Pradesh 3 ** 2 Karnataka 3 2 2 Tamil Nadu 3 2 3 Creation of a scientific storage capacity

§ Scientific storage capacity of 14.19 million metric tons has been created § The scheme has succeeded in creating 8061 new godowns with space of 12.26 million

metric tons across the major states § 1422 godowns in the co-operative sector with a capacity of 1.92 million metric tons have

been renovated to modern scientific standards § Quality of construction of both new godowns and renovated godowns meets the major

criteria defined for construction § A wide spectrum of godowns in terms of ownership and capacity has been built, albeit

concentrated in 15 states with 99% of capacity § Farmers, traders, co-operatives, marketing federations, private sector players are the broad

ownership spectrum with capacities ranging from 100 metric tons to over 10000 metric tons Prevention of distress sale

§ Farmers godowns and the godown space available to farmers allows for a uniform price increase of 5 ~ 15% depending on state and commodity

§ Godowns are being offered for dedicated long term use in many states for public procurement w hich allows farmers to deliver commodities within their operating zones

§ However, farmers have not availed of pledge loans facility with a uniform plea that the banking procedures are cumbersome

§ At the same time, the majority of godown owners (0ver 98%) do not offer the facility of warehouse receipts and pledge loans

§ Tradable Warehouse Receipts System is yet to spread to mainstream agriculture and this will require upgradation of godowns and allied facilities as well as accreditation

Reduction of loss of quantity and quality

§ Overall respondents claim less than 5% wastage due to the godowns § The increase in price realization reflects the quality preservation aspect of the scientific

storage created

States Reduction in the pressure on existing

storage

Introduction of a national system of warehouse

receipts

Encouraging private and co-operative sector investment

Punjab 2 1 3 Haryana 2 1 2 Uttar Pradesh 2 1 2 Madhya Pradesh

3 1 3

Chhatisgarh 2 1 2 West Bengal 3 1 2 Orissa 2 1 1 Bihar 2 1 1 Assam 2 1 2 Rajasthan 2 1 2 Gujarat 2 1 2 Maharashtra 2 1 3 Andhra Pradesh 3 1 3 Karnataka 2 1 2


25

States Reduction in the pressure on existing

storage

Introduction of a national system of warehouse

receipts


Tamil Nadu 2 1 2

Reduction in the pressure on existing storage

§ The addition of 14.18 million metric tons in the major production states contributes to lesser load

§ The created capacity adds to existing public and private storage space Introduction of a national system of warehouse receipts

§ Less than 1% of owners and operators issue receipts to users, however, these receipts are merely storage receipts and not marketable instruments

§ Sample godowns are not accredited by the National Commodity Exchanges [NCDEX & MCX] warehousing partners

§ Warehouse Receipt Systems will provide a single solution for output purchase, pledge finance, marketing, storage and commodity handling as well as allowing for post harvest operations and commodity treatment systems under a single roof

§ It is understood that the warehousing partners for MCX and NCDEX have already contracted godowns built by SWC and CWC in select locations


§ 7107 godowns with a space of 11.36 million metric tons have been created by and for use of the private sector

§ In the co-operative sector, 954 godowns with space of 0.90 million metric tons have been created

§ 1422 godowns in the co-operative sector with a capacity of 1.92 million metric tons have been renovated

§ Private investment leads with 80% of space created and 75% of projects § Co-operative sector chips in with 20% of space and 25% of projects

States Renovation and upgradation of existing storage capacity NCDC

Creation of additional employment

Promotion of grading, standardization and quality

control


3 2 2

Chhatisgarh 2 2 1 West Bengal 2 2 1 Orissa 2 2 1 Bihar 3 2 1 Assam 1 2 1 Rajasthan 1 1 1 Gujarat 1 2 1 Maharashtra 3 2 1 Andhra Pradesh 3 2 3 Karnataka 2 2 2 Tamil Nadu 1 2 1 Renovation and upgradation of existing storage capacity NCDC

§ 1422 godowns in the co-operative sector with a capacity of 1.92 million metric tons have been renovated to modern scientific standards

§ Godowns renovated meet over 95% of the quality needed under scheme thereby providing for quality scientific storage space

Creation of additional employment

§ Upto 5 employees per small godowns, 10 employees per medium godowns and 20+ employees per large godowns are claimed by respondents as being used for permanent and causal employment under this scheme

§ However, particularly, for the large number of godowns set up by small farmers, the employment seems to be derived from using family members as employees and only peak time casual labour during season

§ The building of new godowns and renovation of existing NCDC assisted godowns has provided a fillip to the construction industry in and about the facility

Promotion of grading, standardization and quality control

§ Bulk of produce is still sold to traders and govt. agencies through market yards where grading, standardization and quality control at trader / buyer level points are available

§ Lack of knowledge of post harvest operations & established comfort levels with common practices

§ This aspect is being covered through Ministry of Agriculture’s schemes for Development / Strengthening Of Agricultural Marketing Infrastructure, Grading And Standardization


26

States Timely availability of Inputs

Reduction in the pressure on the transport system

Easy procurement of food grains


1 2 3

Chhatisgarh 1 2 2 West Bengal 1 2 2 Orissa 1 3 3 Bihar 1 2 3 Assam 1 2 2 Rajasthan 3 2 2 Gujarat 1 2 2 Maharashtra 1 2 2 Andhra Pradesh 2 2 3 Karnataka 1 2 2 Tamil Nadu 1 2 3 Timely availability of Inputs

§ Very limited success since owners focus on activity relating to storage of food grains, cash crops for their own crops, trading and for public procurement

§ Inputs particularly crop chemicals and fertilizers pose the chance of cross contamination § Inputs supplies are organized through their own marketing channels of distributors, stockists

and retailers Reduction in the pressure on the transport system

§ The addition of 14.18 million metric tons in the major production states contributes to lesser load on trucking and rail transport

§ Area specific storage in production belts has been created which augments existing storage space

Easy procurement of food grains

§ Farmers without their own godowns still have access to godowns where FCI and its state agencies and other agencies are procuring commodities

The main reasons behind the scheme being unable to meet the 4 objectives mentioned

above are given in Table 8 below:

Table 8 Reasons behind the Rural Godowns Scheme being unable to meet some of the Objectives of the Scheme

Unmet Objectives of the Scheme

Reasons behind the Scheme not being able to meet the objectives

Promotion of grading, standardization and quality control of agricultural produce to improve their marketability

§ Bulk of produce is still sold to traders and govt. agencies through market yards where grading, standardization and quality control at trader / buyer level points are available

§ Lack of knowledge of post harvest operations & established comfort levels with common practices

§ This aspect is being covered through Ministry of Agriculture’s schemes for Development / Strengthening Of Agricultural Marketing Infrastructure, Grading And Standardization

Timely availability of fertilizers, pesticides, inputs, consumer articles, etc. to farmers

§ Godowns are used primarily for storage of agricultural outputs and not fertilizers as can be correlated with the operations, occupation and activity of the owners

§ Fertilizers, agricultural inputs and consumer articles are easily available at local markets through respective trade channels . Therefore the farmers do not feel the need to use the storage facilities to store these products

§ Using storage facilities to store fertilizers along with wheat, rice/paddy etc. leaves a bad odor in the output produce making it difficult to sell later

Providing the facility of pledge loan and marketing credit

§ Lack of awareness about the existence of these facilities § Amongst those farmers who were aware, a majority did not feel the


27

Unmet Objectives of the Scheme

Reasons behind the Scheme not being able to meet the objectives

need to avail of either pledge loans or marketing credit facilities § Those that did were discouraged by the rude behaviour of the bank

officials, the officials’ reluctance to assist in providing pledge loans/marketing credit and the cumbersome procedures involved in availing these facilities

§ Availability of local credit through godown owners and traders Introduction of a national system of warehouse receipts [WRS] in respect of agricultural commodities stored in such godowns

§ Current system of Warehouse Receipt System is only used by MCX & NCDEX accredited storages for the commodities traded on these exchanges, it is also known that these exchanges are utilizing various godowns constructed by private entities as well as CWC / SWC owned ones

§ Other Godowns are used for private storage by farmers, millers, traders as well as by state agencies / co-operatives and there is a general lack of awareness about warehouse receipts

§ Both NCDEX & MCX have specifications and equipment / utility levels beyond the current status of the godowns . Godown accreditation and compatibility are yet to be built to NCDEX / MCX levels

§ Small farmers who store their produce in others’ godowns have an established trust-based relationship with the godown owners and do not demand receipts for storing their produce in the godowns. These godown owners also provide credit assistance to the farmers and help them in many other intangible ways. Most of the godown owners who came under this category were local traders, small business owners, transporters, etc. with whom the farmers have a complex and dynamic relationship which makes it difficult for the farmers to demand receipts for storing their produce.

4.3 Profile of Godown Owners The owners of the godowns that were financed through NABARD were profile against four

different parameters:

§ Their primary occupation

§ Their educational background

§ Their category status; and

§ The extent of their landholding The results from the profiling exercise are presented in Figure 1, 2, 3 and 4 respectively.

As can be seen from Figure 1, in most states, primarily individuals whose primary

occupation is either Farming or Trading have availed of the scheme. Even amongst these

two categories, farmers seem to have availed of the scheme more than traders, with the

only exceptions being in Orissa, Assam and Rajasthan, where traders seem to have

benefited more from the scheme than farmers. However, in states like Andhra Pradesh and

Maharashtra, several private limited companies, partnership firms, the State Government

owned agencies; Co-operative Societies and Marketing Boards seem to have also availed of

the scheme through NABARD. Such bodies have also availed of the scheme in other states,

but not as much as in Andhra Pradesh and Maharashtra.


28

From this it can be inferred that in the States where the farmers’ earnings from agriculture is

relatively limited, and therefore so is their ability to invest, traders and other business men

have moved in to set up storage facilities. Similarly in States where the economic profile of

farmers is relatively better off, mostly medium and big farmers have made investments in

creating storage facilities. However, even in these states where the medium and large

farmers have created their own storage facilities, there appears to be a need for additional

storage in the rural areas, and various service providers like traders, transporters, persons

engaged in the retail trade, etc. have filled in this gap by making the required investments.

Moreover, from the discussions held with DMI and NABARD officials, it was found that in the

initial years when the scheme was launched, big traders from Punjab and Andhra Pradesh

were the first set of entrepreneurs who availed of the scheme more than farmers. The

reason behind this was that just before the launch of the scheme; FCI had announced that it

wanted to augment their storage capacities by hiring space from private entrepreneurs on a

long-term basis. As a result, those traders and businessmen who came to know of both

FCI’s announcement and also about the launch of the rural godowns scheme, availed of the

scheme and constructed the godowns. These godowns were largely the medium and large

capacity godowns. These godowns were then leased out to FCI resulting in the

entrepreneurs earning a risk free income for the period of the lease.

Only in the last 3 years or so have the small farmers have been availing of the scheme more

than other entrepreneurs. This indicates that farmers have begun to realize the intrinsic

value of having their own storage facilities and are willing to take the risk of constructing

these facilities by availing of the benefits provided by the scheme. This is a positive

development and needs to be encouraged further.


29

Figure 3 Occupation of the Godown Owners

0

10

20

30

40

50

60

70

80

90

100

Punja

b

Haryan

a

Chattis

garh

West Be

ngal

Gujurat

Assa

m

Andh

ra Pra

desh

Karna

taka

Mahara

shtra UP

Orissa

Rajasth

an MP

Tamilna

duOve

rall

Farming Trading and distributing Retail Service Others


30

Figure 4 Education Profile of Godown Owners

The education profile of the godown owners (as shown in Figure 2) reveals that mostly

individuals who are educated below the 10th Standard, or those who have graduate level

qualifications have constructed more godowns in the country, than those who are educated

up to the 12th Standard or those who have post graduate or professional qualifications. This

distribution implies that the scheme has attracted people who either have a very basic level

of education, or those who have higher qualifications. Further classifications revealed that

the godown owners who were educated only upto the 10th Standard were primarily farmers

whereas godown owners with graduate degree and higher degrees were either Traders or

are engaged in other businesses. The farmers typically own small sized godowns (i.e.

godowns that have capacities up to 1000 MT or less) whereas the godowns owned by the

traders are either Mid Sized Godowns (between 1000 and 5000 MT capacities) or Large

Sized Godowns (over 5000 MT capacity).

0%

20%

40%

60%

80%

100%

Punja

b

Harya

na

Chatt

isgarh

West Be

ngal

Gujur

atAssam

Andh

ra Pra

desh

Karna

taka

Mahara

shtra UP

Orissa

Rajas

than MP

Overa

ll

Upto 10th Upto 12th Graduate Professional No Response


31

Figure 5 Caste Profile of Godown Owners

Again, as can be seen from Figure 3, more than 90% of the godown owners across the

country belong to the ‘General’ Caste category. While individuals from the ‘Scheduled

Caste’ and ‘Scheduled Tribes’ categories have also availed of the scheme in many states;

the composition of individuals from these communities have been negligible. This is indeed

a surprising finding given the fact that the guideline of scheme has extra subsidy assistance

earmarked for individuals belonging to the SC and ST communities.

0%

20%

40%

60%

80%

100%

Punja

b

Harya

na

Chatt

isgarh

West Be

ngal

Gujur

atAss

am

Andh

ra Pra

desh

Karna

taka

Mahara

shtra UP

Orissa

Rajas

than MP

Overa

ll

SC ST General No Response


32

Figure 6 Extent of Land Holding of the Godown Owners

From Figure 6 it can be seen that a majority of entrepreneurs who have availed of the rural godowns scheme (and who responded to the

enquiries on their landholding size) are small landowners (having holdings between 1 and 10 acres of land).

-

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

90.00

Punja

b

Harya

na

Chattisg

arh

West Be

ngal

Gujarat

Assam

Andh

ra Prad

esh

Karna

taka

Mahara

shtra UP

Orissa

Rajast

han

Tamil N

adu MP

Overall

Between 1 and 10 Acres Between 11 and 20 Acres Between 21 and 40 Acres More than 40 Acres No Response


33

4.4 Extent to which Farmers have benefited from the Scheme With reference to the State Reports given in Annex 5, it can be seen that most of the rural

godowns in the country have been done constructed by individual entrepreneurs on their

own lands. As is seen from the field research findings, the primary occupation of godown

owners is farming, trade and other business occupations apart form the co-operative and

state owned godowns. The overall view of beneficiaries is positive, that the godowns have

helped them store their produce that was prone to losses in the past. To that extent, the

entrepreneurs appear to be extremely satisfied with the role that the godowns have had to

play in reducing the extent of physical losses of their agricultural produce and they can

withhold the produce to sell at remunerative prices later on. Over the period of time that the

farmers have been storing their produce in the godowns, they feel that they have been

realizing better prices for the goods stocked in the godowns.

In most states, the farmers haven’t yet begun to access credit from banks and other formal

institutional sources against goods stored in the godowns. While the lack of awareness

about such credit facilities was a major factor for the slow progress in meeting this objective,

the reluctance of bank officials in extending such credit to the farmers and the cumbersome

procedures involved in accessing such credit facilities were other impediments towards the

realization of this objective of the scheme.

4.5 Status of Completion of Storage Projects and their Operational Status More than 80% of the godowns in the Country have been constructed and are operational.

The remaining are either under construction or are partially constructed but operational.

The field survey also revealed that more than 95% of the godowns constructed under the

rural godowns scheme are used to store agricultural outputs only. Less than 5% of the

godowns constructed under the scheme are used to store both agricultural inputs as well as

output produce. It was also found that the godowns that are completely constructed and

operational typically see occupancy rates that are generally above 75% of their total storage

capacities. Some partially completed godowns are also being used for storage purposes.

These godowns typically witness occupancy rates that range between 25 to 50% of the total

sanctioned storage capacities.

The commodity wise utilization of storage space created through the godowns is presented

in Table 9 below:


34

Table 9 Commodity wise utilization of storage space created through the rural godowns scheme

< 1000 MT 1000 ~ 4999 MT > 5000 MT States

< 10% 10 ~ 25%

25 ~ 50% 50 ~ 75% 75 ~ 100%

< 10% 10 ~ 25% 25 ~ 50% 50 ~ 75%

75 ~ 100%

< 10% 10 ~ 25%

25 ~ 50% 50 ~ 75%

75 ~ 100%

Punjab Rice/paddy, cotton,

pulses, vegetables

Wheat Rice/paddy, cotton,

pulses, vegetables

Turi Wheat Wheat

Haryana Rice/paddy, mustard

seeds

Turi, sugarca

ne

Wheat Rice/paddy, mustard

seeds

Turi, sugarcane

Wheat Rice/ paddy,

mustard seeds

Turi, sugarca

ne

Wheat

Uttar Pradesh

Sugarcane Rice/paddy Wheat Sugarcane Rice/paddy Wheat Sugar cane

Rice/paddy Wheat

Madhya

Pradesh

Rice/paddy

, coriander,

onions, gram

Soybean

, Pulses

Wheat Rice/paddy Soybean,

Pulses

Wheat Soybea

n,

Pulses

Wheat

Chhatis

garh

Wheat,

Pulses,

Tendu Patta

Rice/

paddy

Wheat,

Pulses,

Tendu Patta

Rice/pad

dy

Rice/paddy

West

Bengal

Maize,

onions,

wheat

Jute Rice/

paddy

Maize,

onions,

wheat

Jute Rice/pa

ddy

Jute Rice/

paddy

Orissa Cotton Rice/ paddy

Cotton Rice/paddy

Cotton Rice/paddy

Assam Spices, pulses

Rice/ paddy

Spices, pulses

Rice/paddy

Spices, pulses

Rice/paddy

Rajasthan

Mustard Seeds

Mustard Seeds

Fertilizers,

Mustard Seeds


35

< 1000 MT 1000 ~ 4999 MT > 5000 MT States

< 10% 10 ~

25%

25 ~ 50% 50 ~ 75% 75 ~

100%

< 10% 10 ~ 25% 25 ~ 50% 50 ~

75%

75 ~

100%

< 10% 10 ~

25%

25 ~ 50% 50 ~

75%

75 ~ 100%

pesticides

, etc.

Gujarat Wheat, Tendu

Patta,

Groundnut, Garlic

Spices Cotton Wheat, Tendu

Patta,

Groundnut, Garlic

Spices Cotton Wheat, Groundnu

t, Garlic

Spices Cotton

Maharas

htra

Rice/paddy

, spices

Wheat,

Cotton

Rice/paddy,

spices,

groundnut, pulses

Wheat,

Cotton,

Soybean

Rice/pad

dy,

spices, groundnu

t, pulses

Wheat,

Cotton,

Soybean

Andhra

Pradesh

Pulses,

groundnut, fodder,

husk, etc.

Rice/

paddy

Pulses,

groundnut, fodder,

husk, etc.

Rice/pad

dy

Pulses,

groundnut, fodder,

husk, etc.

Rice/paddy

Karnata

ka

Spices,

pulses, areca nut

Rice/

paddy

Spices,

pulses, areca nut

Rice/pad

dy

Spices,

pulses, areca nut

Rice/paddy

Tamil

Nadu

Wheat,

rice,

groundnut

Sugar,

mustard

seeds, cotton

Wheat,

rice,

groundnut

Sugar,

mustard

seeds, cotton

Wheat,

rice,

groundnut

Sugar,

mustard

seeds, cotton

Thus usage is determined by the local production profile of the area. This data clearly brings out the fact that storage has been created to

meet the local storage needs and to that extent the storage facilities that have been created are helping the farmers of the area in realizing

remunerative marketing of their produce.


36

4.6 Role of Rural Godowns in helping the Rural Economy The Rural Godowns Scheme seems to have encouraged farmers, especially the small

farmers in creating storage capacities for their produce, which was otherwise sold at low

prices immediately after the harvest season. Most of the respondents mentioned that they

are able to enjoy between 5 to 15% increase in prices for their produce by holding the same

to avoid distress sale after harvest and due to the fact that scientific storage permitted

quality preservation which helped them fetch both better realization on the saleable volumes

and the prices received.

State wise averaged price rise is depicted the chart below. Table 10 Price Rise

States % Increase in Prices States % Increase in Prices Punjab Upto 10% UP 10% Haryana Upto 10% Karnataka 10% Chattisgarh 5 ~ 8% Maharashtra 10% West Bengal 10% Andhra Pradesh 5% Gujarat 10% Orissa 5% Assam 5% Rajasthan 5%

MP 5 ~ 8% Tamil Nadu 10% The enhanced income has not only helped in marginally raising the standard of living of the

farmers but also seems to have enabled the farmers to augment their household asset

base, pay off debts, acquire more livestock, other consumer goods and/or build their savings

base. The creation of rural godowns has also helped generate additional employment

opportunities for the rural poor.

Reduction in Wastage The setting up of the godowns has helped farmers and owners reduce wastage to a very

large extent across all states. The overwhelming majority of respondents claim wastage

levels at below 5% across all scales of godowns and across all states. Within this category

as well, there is a large body of owners and farmers who claim 1 ~ 2% wastage levels due

to the access to scientific storage levels. The findings of the survey have been encapsulated

in Table 11 below.

This clearly depicts the high level of satisfaction that owners and users experience due to

the creation of the facilities. Apart from the users claimed reduction in post harvest losses,

the creation of the godowns add to the marketable surplus hitherto in terms of the product

volumes preserved. The reduction is wastage also adds to the owners incomes.


37

Table 11 Wastage Level

States < 1000 MT 1000 - 4999 MT > 5000 MT Waste Level < 5% 5 ~ 10% > 10% < 5% 5 ~ 10% > 10% < 5% 5 ~ 10% > 10% % of respondents % of respondents % of respondents Punjab 55.9 38.0 6.1 50.0 50.0 0.0 50.0 50.0 0.0 Haryana 76.5 17.6 5.9 60.0 40.0 0.0 37.5 60.0 2.5 Chattisgarh 77.3 22.7 0.0 100.0 0.0 0.0 100.0 0.0 0.0 West Bengal 69.2 23.1 7.7 0.0 0.0 0.0 0.0 0.0 0.0 Gujarat 81.0 16.7 2.4 100.0 0.0 0.0 100.0 0.0 0.0 Assam 100.0 0.0 0.0 100.0 0.0 100.0 0.0 0.0 Andhra Pradesh 100.0 0.0 0.0 100.0 0.0 0.0 100.0 0.0 0.0 Karnataka 96.5 3.5 0.0 100.0 0.0 0.0 0.0 0.0 0.0 Maharashtra 93.7 4.8 1.6 100.0 0.0 0.0 0.0 100.0 0.0 UP 33.3 66.7 0.0 100.0 0.0 0.0 25.0 75.0 0.0 Orissa 100.0 0.0 0.0 100.0 0.0 0.0 100.0 0.0 0.0 Rajasthan 100.0 0.0 0.0 100.0 0.0 0.0 100.0 0.0 0.0 MP 89.3 1.8 8.9 90.0 10.0 0.0 89.0 11.0 0.0 Tamil Nadu 100.0 0.0 0.0 100.0 0.0 0.0 100.0 0.0 0.0


38

Respondents claim employment generated across the spectrum size of the godowns. While

state wise employment figures vary on account of the godown profile and business model

used, it can be said that a small godown (76%) generates 5 jobs, a medium scale godown

(13%) generates 5 ~ 10 jobs while a large scale godown (11%) generates 10 ~ 20 jobs.

Assuming a conservative estimate of 5 jobs per small godown, 8 jobs per medium godown

and 15 jobs per large godown and using the size distribution data available on NABARD

assisted godowns, employment estimates are,

Size Godown Population Estimated Jobs Per Godown Employment Created

Small 5401 5 27007 Medium 924 8 7391 Large 782 15 11727 Total 7107 46124

* as per NABARD godown size distribution

A summary of employment findings is depicted below in Table 12. Table 12 Employment Generated

States < 1000 MT 1000 ~ 4999 MT > 5000 MT No. of Persons

1 ~ 5 6 ~ 10 11 ~ 20 > 20 1 ~ 5 6 ~ 10 11 ~ 20 > 20 1 ~ 5 6 ~ 10 11 ~ 20 > 20

% of respondents % of respondents % of respondents Punjab 51.2 33.0 13.4 2.5 33.3 33.3 0.0 33.3 0.0 0.0 50.0 50.0 Haryana 75.0 16.7 8.3 0.0 20.0 40.0 20.0 20.0 16.7 16.7 33.3 33.3 Chattisgarh 59.1 18.2 18.2 4.5 0.0 40.0 50.0 10.0 0.0 0.0 100.0 0.0 West Bengal

46.2 31.9 13.4 8.5 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Gujarat 63.4 26.8 7.3 2.4 100.0 0.0 0.0 0.0 0.0 0.0 0.0 100.0 Assam 100.0 0.0 0.0 0.0 100.0 0.0 0.0 0.0 100.0 0.0 0.0 0.0 Andhra Pradesh

9.8 68.6 11.8 9.8 20.0 40.0 37.0 3.0 0.0 0.0 29.0 71.0

Karnataka 67.2 25.0 1.6 6.3 30.0 35.0 31.5 3.5 0.0 0.0 63.0 37.0 Maharashtra 82.0 11.5 4.9 1.6 33.3 41.7 20.8 4.2 0.0 0.0 0.0 100.0 UP 22.2 55.6 11.1 11.1 0.0 0.0 100.0 0.0 0.0 0.0 0.0 100.0 Orissa 90.0 10.0 0.0 0.0 0.0 100.0 0.0 0.0 0.0 100.0 0.0 0.0 Rajasthan 100.0 0.0 0.0 0.0 100.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 MP 30.4 33.2 32.1 4.3 0.0 66.7 33.3 0.0 75.0 0.0 0.0 25.0

Tamil Nadu 43.2 25.3 23.1 8.3 0.0 33.3 66.7 0.0 0.0 100.0 0.0 0.0

4.7 Effectiveness of the Training & Awareness Programmes conducted under the

Scheme NIAM has developed a comprehensive stakeholder based training and awareness program.

From the data made available by NIAM it is evident that while work done so far has been

pioneering and has contributed both to the reach and implementation of the scheme via the

stakeholders, both awareness and training need to be conducted on an intensive basis

across the states on a state crop approach and to be implemented using a state

participatory strategy.


39

NIAM has conducted programs, training and awareness sessions for all the stakeholders

envisaged under the scheme ranging from DMI and State Department officials, banking and

co-operative sectors as well as farmers and entrepreneurs. The results of NIAM’s work done

are depicted below.

A majority of entrepreneurs across the country who have constructed their godowns through

the rural godowns scheme came to know about the scheme through the respective branch

offices of the financing banks. This too was enabled because most of the entrepreneurs

have had past professional associations with the respective banks and are known to the

local bank officials.

Awareness about the scheme was also generated through friends and relatives of the

entrepreneurs who got to know about the scheme from their contacts in the local banks, DMI

or other government departments.

The third most prominent mode of awareness creation seemed to be newspaper

advertisements about the scheme.

These three modes of publicity / awareness creation have driven interest amongst the local

entrepreneurs to demand the scheme from the government. As such, the scheme seems to

be heavily supply driven rather than demand oriented and depends primarily on the interest

and ability of bank officials in ‘selling’ the scheme to persons known to them.

According to the detailed field survey, while a low proportion of the godown owners and

farmers claimed that they had received any training under the rural godowns scheme, the

respondents claimed that the training provided to them was ‘very useful’ and ‘relevant’ to

their needs.

However, majority of respondents claimed that they had not received any training under the

scheme and were unaware as to whether there was a provision for them to receive any

training under the scheme. Most of those who had received training could not recall the

name of the organization or agency that had provided them with the training.

At this point, it needs to be said that only a limited number of farmers and entrepreneurs

training programs have been conducted in limited states across the country in tandem with

state and other organizations. This perhaps is the reason that the respondents have low or

nil recall of the training organization.


40

On a futuristic note, consultants suggest that NIAM may incorporate the emerging trend of

national commodities markets, MCX & NCDEX, as captive users of godowns space as

modern warehouses. NIAM may therefore, consider, incorporating modules in training as a

vital component of Quality & Skills Development for godowns wishing to migrate to the

national network as well as for inculcating modern warehousing practices. Details of NIAM’s

training and awareness programs are available as Annexure 6.

4.8 Quality of Construction By and large, the godowns that have been constructed under the rural godowns programme

through NABARD’s assistance have, on an average, met between 75 ~ 90 % of the different

quality of construction criteria laid down in the operational guidelines for the scheme. On the

other hand, the NCDC assisted godowns (built mostly by Co-operative Societies,

Government Corporations and Marketing Boards) that are built across the country met more

than 95 % of the different quality of construction criteria laid down in the operational

guidelines for the scheme.

For most of the NABARD assisted godowns across all the States, especially the small and

medium capacity godowns, of the 11 parameters specified under quality of construction

specifications, the parameters that have mostly been compromised on are:

§ Provision of proper drainage facilities

§ Protection measures from rodents

§ Pucca internal roads

§ Plastering of inner and outer walls; and

§ Effective controls against fire.

While effective controls against fire is a parameter that has mostly been overlooked on

account of it not registering as a significant risk in the minds of the godown owners, the

other parameters have significant cost implications (especially construction of pucca internal

roads and provision of proper drainage facilities) on account of which the godown owners

have attempted to control the escalation in the cost of construction of the godowns by not

incurring these additional expenses. Agency wise responses are indicated below in Table

12.


41

Table 12 Commodity-Wise Utilization of Storage Space

NABARD Punjab Haryana Chattisgarh West Bengal

Gujarat Assam Andhra Pradesh

Karnataka Maharashtra Uttar Pradesh

Orissa Rajasthan Madhya Pradesh

Construction of Godown on the basis of CPWD/SPWD specification

87.4 80.6 77.9 74.2 93.5 100.0 98.2 97.0 92.9 100.0 100.0 100.0 73.0

Proper ventilation 89.0 71.4 96.4 81.1 93.5 83.3 100.0 100.0 95.7 100.0 100.0 100.0 100.0 Well fitted doors 85.4 80.6 100.0 94.3 93.5 100.0 100.0 98.5 97.1 100.0 100.0 100.0 98.4 Windows 60.7 67.9 100.0 74.7 87.0 78.3 89.7 98.5 95.7 100.0 90.0 100.0 100.0 Waterproof (control of moisture from floor, alls and roof etc)

74.4 83.3 96.3 79.1 80.4 100.0 84.5 100.0 85.7 100.0 100.0 100.0 98.4

Protection from rodents

78.0 83.9 96.3 86.8 87.0 80.0 96.6 100.0 95.7 92.9 100.0 100.0 95.2

Protection from birds 81.3 80.6 100.0 90.6 89.1 80.0 96.6 100.0 94.3 100.0 90.0 100.0 96.8 Effective fumigation 74.6 72.4 100.0 94.0 33.3 100.0 94.7 71.6 18.6 100.0 55.6 100.0 100.0 Accessibility to Road 74.5 87.1 74.1 96.2 41.3 100.0 98.3 95.5 60.0 78.6 100.0 100.0 90.3 Pucca Internal Road 73.2 77.4 65.9 94.3 66.5 82.2 87.9 89.6 68.6 50.0 70.0 100.0 54.8 Proper drainage facility

69.0 80.6 68.5 65.4 79.6 50.0 81.0 92.5 67.1 50.0 100.0 100.0 46.8

Effective control against fire and theft

79.2 73.3 74.1 65.1 69.6 80.0 81.0 70.1 70.0 92.9 50.0 100.0 88.5

Plastering of outer wall

80.8 87.1 96.3 67.9 97.8 90.0 93.1 92.5 92.9 100.0 100.0 100.0 98.4

Plastering of Inner Wall

81.3 83.9 100.0 84.9 97.8 100.0 98.3 97.0 94.3 100.0 100.0 100.0 98.4

Pucca Flooring 78.5 83.3 96.3 84.9 93.5 90.0 91.4 100.0 85.7 100.0 100.0 100.0 98.4


42

NCDC Punjab Haryana Chattisgarh West

Bengal Gujarat Assam Andhra

Pradesh Karnataka Maharashtra Uttar

Pradesh Rajasthan Madhya

Pradesh Construction of Godown on the basis of CPWD/SPWD specification

83.3 100.0 80.0 87.5 30.0 100.0 100.0 100.0 100.0 100.0 100.0 41.4

Proper ve ntilation 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Well fitted doors 100.0 100.0 100.0 100.0 100.0 100.0 93.8 100.0 100.0 100.0 96.8 100.0 Windows 100.0 100.0 100.0 100.0 80.0 100.0 75.0 100.0 100.0 100.0 100.0 100.0 Waterproof (control of moisture from floor, alls and roof etc)

94.4 100.0 100.0 87.5 100.0 100.0 93.8 100.0 100.0 100.0 96.8 100.0

Protection from rodents

100.0 100.0 90.0 81.3 88.9 100.0 93.8 100.0 100.0 100.0 100.0 96.6

Protection from birds 100.0 100.0 100.0 87.5 100.0 100.0 100.0 100.0 100.0 100.0 100.0 96.6 Effective fumigation 88.9 85.7 100.0 87.5 73.3 75.0 66.7 98.2 100.0 100.0 Accessibility to Road 88.9 100.0 90.0 87.5 90.0 73.3 93.8 100.0 25.0 98.2 93.5 89.7 Pucca Internal Road 83.3 100.0 70.0 75.0 90.0 73.3 75.0 100.0 75.0 75.5 83.9 82.8 Proper drainage facility

77.8 81.0 70.0 81.3 80.0 73.3 73.3 66.7 75.0 75.5 100.0 89.7

Effective control against fire and theft

94.4 100.0 90.0 75.0 30.0 73.3 43.8 100.0 75.0 49.1 100.0 96.6

Plastering of outer wall

100.0 100.0 100.0 93.8 100.0 100.0 93.8 100.0 100.0 100.0 100.0 100.0

Plastering of Inner Wall

100.0 100.0 100.0 100.0 100.0 100.0 93.8 100.0 100.0 100.0 100.0 100.0

Pucca Flooring 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0


43

4.9 Regional Imbalance in the construction of rural godowns From the distribution of rural godowns across the country, it can be seen that the Northern

Region (comprising Punjab, Uttar Pradesh, Haryana, Uttaranchal, Himachal Pradesh,

Jammu & Kashmir) account for more than 44% of the total numbers and capacities of

godowns created in the country. The Western Region (comprising Maharashtra, Gujarat and

Rajasthan) and the Southern Region (comprising Andhra Pradesh, Karnataka, Kerala and

Tamil Nadu) account for approximately 16.4% of the total numbers and capacities of

godowns created whereas the Eastern Region (comprising West Bengal, Bihar, Orissa and

Chhatisgarh) account for around 11% of the total numbers and capacities of godowns

created. Madhya Pradesh (Central Region) alone accounts for about 9.7% of the godowns

created under the rural godowns scheme. In comparison, the North Eastern Region

(comprising the Seven Sisters) account for less than 1% of the total godowns created under

the scheme and the Union Territories taken together account for less than 0.02% of the total

numbers and capacities of storage spaces created under the scheme.

Even within the regions, some states like Punjab (in the Northern Region), Andhra Pradesh,

and to some extent Karnataka (in the Southern Region), Maharashtra (in the Western

Region) and Chhatisgarh and West Bengal (in the Eastern Region) have a larger share of

rural godowns than the other States in the region.

Even within the States, some districts in the states have a disproportionately large number

of godowns than the others (for example Nadia in West Bengal, Ferozepur & Bhatinda in

Punjab, Rajkot in Gujarat, Hoshangabad in Madhya Pradesh, Akola in Maharashtra, Ganjam

in Orissa, etc.) account for a bulk of the godowns created in the State.

This distribution not only reveals a regional imbalance in the distribution of rural godowns,

but also an inter-region imbalance as well as an intra-state imbalance. While obvious factors

like proximity to the major mandis in the state, differences in the quantities of foodgrain and

pulses produced within the state, etc. are the major causes behind the regional imbalances,

other key factors like the extent of interest and initiative shown by bank officials in ‘selling’

the concept of rural godowns to local entrepreneurs (for example in Nadia in West Bengal

and Bhatinda and Ferozepur in Punjab), publicity and awareness created about the scheme

at the local level, etc. have also played a major role behind these regional imbalances. In

short, dominant producers of food grain and related agricultural products comprise the

majority of godowns and capacity.


44

Again in the North Eastern Region of the country a combination of factors like harsh

topographical conditions, limited agricultural production, low economic growth rates,

negligible presence of Co-operatives, lower outreach of banking services, lack of awareness

about the scheme, insurgency, etc. have played a major role in the limiting the popularity

and therefore the off-take of the scheme.

4.10 Weak Management Information Systems As mentioned in the earlier parts of the report, the consultants had to spend an inordinate

amount of time co-ordinating with the DMI Headquarters in Faridabad, State Offices of DMI,

NABARD Headquarters and State Offices, DoAC and NCDC to collect even the most basic

secondary information about the scheme (viz. capacity wise distribution of rural godowns in

the States, district wise distribution of godowns in the State, date of sanction of the

godowns, names and addresses of godown owners, indicative locations of the godowns,

etc.). This kind of information was not available either at the DMI headquarters or with

NABARD. The lack of such information hampered the commencement of the study.

When the information requested was finally made available to the consultants, it was either

incomplete or incomprehensible. Also different States had furnished the information in

different formats making it that much more time consuming for the consultants to

standardize the data and make it useable for the purpose of the study.

Apparently, it is the responsibility of the branch officials of the local banks that are financing

the schemes (for NABARD assisted godowns) to collect the basic information about the

entrepreneurs availing of the scheme and furnish it to the Regional offices of the Banks. The

Regional Offices of the financing banks consolidate the information coming from various

villages/districts and send the consolidated information to the Bank Headquarters. At the

Headquarter level, the information is further compiled and sent to NABARD State Offices

from where it goes to DMI. Mostly financial information is collected through this chain and

there is almost no emphasis on collecting information that could, in some way, enable

agencies like DMI and/or DoAC to understand how the scheme is performing (i.e. whether

the scheme is being able to meet its stated objectives or not and if not then what could be

done to ensure that it does). This is a major area of weakness of the scheme and needs to

be addressed urgently.


45

As for the godowns assisted by NCDC, the information available with the NCDC

Headquarters in Delhi about the scheme was rather limited and even in the State offices of

NCDC the state wise data on NCDC assisted godowns under the rural godowns scheme

was sketchy. This too needs to be addressed effectively in order to ensure that DoAC and

DMI have the required information to take critical management and policy decisions.

4.11 Role of NGOs Though the guidelines to the scheme mention that NGOs can participate in the construction

of godowns, there hasn’t been a single example of NGO participation in the scheme. While it

is likely that NGOs would not construct and operate godowns under the scheme, their role in

creating awareness about the scheme at the grassroots level, enabling demand creation

and facilitating the training programs for local entrepreneurs needs to be explored

thoroughly.

4.12 Trends in Indian Agriculture Food grain, the main commodity stored has grown at a CAGR of 1% over a period covering

1994 – 1995 to 2004 – 2005. Volumes have grown from 191.5 million tons in 1994 – 1995 to

206.39 million tons in 2004 - 2005. Production across Kharif and Rabi cycles have almost

equalized compared to previous years based on growth in Rabi cycle due to increase in rice,

cereals, pulses, maize and the principal crop, wheat.

Figure 7 Foodgrain Production (Million tons)

Projections in production for the next 5 years sensitized to CAGR on pessimistic and

optimistic growth rates are as depicted under.

Foodgrain Production (Million tons)

0 50

100 150 200 250

1994

- 1

995

1995

- 1

996

1996

- 1

997

1997

- 1

998

1998

- 1

999

1999

- 2

000

2000

- 2

001

2001

- 2

002

2002

- 2

003

2003

- 2

004

2004

- 2

005

Years

Mill

ion

To

ns

Kharif Rabi Total


46

Foodgrain Production Estimates

(in million tons) @ CAGR %

0.5% 1.0% 1.5% 2.0% 2007 - 2008 209.50 212.64 215.82 219.02 2008 - 2009 210.55 214.77 219.05 223.40 2009 - 2010 211.60 216.92 222.34 227.87 2010 - 2011 212.66 219.09 225.68 232.43 2011 - 2012 213.72 221.28 229.06 237.08

Other commodities / major crops storable in the godowns include Oilseed, Spices and

Cotton which are grown dominantly in specific states. Cotton grown in Gujarat, Andhra

Pradesh, Maharashtra and Punjab is processed generally within the states before being

shipped to textile mills in state and outside. Spices cover Seed spices in Rajasthan, Madhya

Pradesh and other spices in Chattisgarh, Kerala, Karnataka, and Orissa are grown and

processed to a lesser extent in the growing states as they are consumed in direct and

processed forms before being shipped nationally in whole and processed forms. Oilseed, a

deficit crop is stored and processed in the home states mainly before being shipped in

processed forms to home and other states.

Figure 8 Cotton / Oilseed / Spices Production Projections in production for the next 5 years sensitized to CAGR on pessimistic and

optimistic growth rates are as depicted under.

COTTON OILSEED SPICES PRODUCTION

0

5

10

15

20

25

30

35

1999 -2000

2000 -2001

2001 -2002

2002 -2003

2003 -2004

2004 -2005

YEARS

MIL

LIO

N T

ON

S

Oilseeds

Cotton

Spices

Total


47

Oil Seed Cotton Spice Production Estimates (in million tons) @ CAGR %

0.5% 1.0% 1.5% 2.0% 2007 - 2008 31.11 31.42 31.74 32.05 2008 - 2009 31.27 31.74 32.21 32.69 2009 - 2010 31.43 32.06 32.70 33.34 2010 - 2011 31.58 32.38 33.19 34.01 2011 - 2012 31.74 32.70 33.68 34.69

Other significant products storable include Non Timber Forest Produce including Tendu leaf,

Sal Seed, Karanj Seed, Niger Seed, broom grass and others from the major producing

states including the North East. Procurement and storage are done through a combination

of TRIFED, State specific Forest Departments & Corporations, Government agencies and

private traders.

High value specialty crops include dried mushroom products in the states of Himachal

Pradesh and Jammu & Kashmir. Products include various types of mushroom including the

prized morels. In Jammu & Kashmir, a significant other product is Walnuts which is unique

to the state again with a small farmer base which can be supported.

In the Southern part of the country, coffee and cocoa, both high value crops, focused within

area clusters in Kerala and Karnataka, albeit with a small farmer production base which can

be developed to use the scheme.

Storage includes covered and CAP storages as detailed under on the basis of data made

available for FCI, CWC, SWC and DMI assisted godowns.

Storage Capacity (in million tons)

FCI CWC / SWC Gramin Bhandaran

Yojana Scheme

Total

2000 – 2001 NA 22.11 - - 2001 – 2002 35.65 25.18 - - 2002 – 2003 30.38 29.72 - - 2003 – 2004 25.44 29.64 10.81 * 65.89 2004 – 2005 26.12 29.64 14.18 * 69.94

* Sanctioned Storage needs have been worked out on a basis of approximately 70% of annual production

to balance Kharif and Rabi cycles to consumption and arrive at an informed estimate of

likely gaps on the basis of capacity available at this stage.


48

Projected Storage Gap Estimates (in million tons) @ CAGR %

[Foodgrains, Cotton, Oilseed, Spices]

0.5% 1.0% 1.5% 2.0% 2007 - 2008 98.48 100.90 103.35 105.80 2008 - 2009 99.33 102.61 105.94 109.32 2009 - 2010 100.18 104.34 108.58 113.44 2010 - 2011 101.02 106.08 111.26 116.56 2011 - 2012 101.88 107.84 113.97 120.44

Conservative growth estimates in agricultural production could mean a 98 million ton gap by

2007 – 2008 between production and storage rising to just over a 100 million tons by 2011 –

2012. As per the CAGR evidenced over the last decade of about 1%, gap in 2007 – 2008

will be 100 million tons rising to 107 million tons by 2011 – 2012. Should India experience

higher production either on account of bumper crop, area under production or yield rises, the

gap can be depicted by higher growth estimates.

Figure 9 Storage Gap (CAGR) Recent trends in the Agricultural Sector that will impact the agricultural production and

storage industry include, v Warehouse Receipt Trading Systems through establishment of National

Commodity Exchanges like National Commodities & Derivatives Exchange

Limited [NCDEX] & Multi Commodity Exchange of India Limited [MCX]

- National Commodity & Derivatives Exchange Limited (NCDEX) is a professionally

managed online multi commodity exchange promoted by ICICI Bank Limited (ICICI

Storage Gap ( CAGR )

40

50

60

70

80

90

100

110

120

130

2007 - 2008 2008 - 2009 2009 - 2010 2010 - 2011 2011 - 2012

Millio

n Tons

2.00%

1.50%

1.00%

0.50%


49

Bank), Life Insurance Corporation of India (LIC), National Bank for Agriculture and

Rural Development (NABARD) and National Stock Exchange of India Limited (NSE),

Punjab National Bank (PNB), CRISIL Limited (formerly the Credit Rating Information

Services of India Limited), Indian Farmers Fertiliser Cooperative Limited

(IFFCO) and Canara Bank.

- NCDEX currently facilitates trading of 44 commodities - Castor Seed, Chana, Chili,

Coffee - Arabica, Coffee - Robusta, Common Parboiled Rice, Common Raw Rice,

Cotton Seed Oilcake, Crude Palm Oil, Expeller Mustard Oil, Groundnut (in shell),

Groundnut Expeller Oil, Grade A Parboiled Rice, Grade A Raw Rice, Guar gum,

Guar Seeds, Gur, Jeera, Jute sacking bags, Indian 28 mm Cotton , Indian 31 mm

Cotton , Lemon Tur, Maharashtra Lal Tur, Masoor Grain Bold, Medium Staple

Cotton, Mentha Oil , Mulberry Green Cocoons , Mulberry Raw Silk , Rapeseed -

Mustard Seed, Pepper, Raw Jute, RBD Palmolein, Refined Soy Oil , Rubber,

Sesame Seeds, Soy Bean, Sugar, Turmeric, Urad (Black Matpe), V-797 Kapas,

Wheat, Yellow Peas, Yellow Red Maize, Yellow Soybean Meal.

- Multi Commodity Exchange of India Limited MCX an independent and de-mutulised

multi commodity exchange works on facilitating online trading, clearing and

settlement operations for commodity futures markets across the country. Key

shareholders of MCX are Financial Technologies (India) Ltd., State Bank of India,

NABARD, NSE, HDFC Bank, State Bank of Indore, State Bank of Hyderabad, State

Bank of Saurashtra, SBI Life Insurance Co. Ltd., Union Bank of India, Bank Of India,

Bank Of Baroda, Canara Bank, Corporation Bank.

- NBHC is an end-to-end solution provider in warehousing and bulk handling of agri-

commodities dedicated to MCX members. Operations include storing goods at and

effecting delivery through Exchange designated warehouses. NBHC aims to manage

a chain of accredited warehouses across India. Other than promoting a franchisee

business model for setting up warehouses, the Company also offers the following

services to its direct depositors, like, international quality systems for storage,

preservation and protection, grading and assaying, standard quality purchases,

offloading and disposal services, demating of warehouse receipts for expedient

transfer of ownership, etc. NBHC's Accredited Warehouses across India function

under stringent International Quality Assurance Procedures, Structural Standards

Policy and Operational Practices. The warehouse accreditation process includes

Operational, Technical, and Financial parameters.

- With respect to the godowns to be franchised, NBHC examines godown design and

installations for pest / contamination risks, stock protection and fire fighting systems,


50

ventilation systems, IT enabled warehouse management systems, storage and

retrieval – handling systems, receiving and weighing systems and pest control apart

from the location, capacity and strategic importance for crop storage.

- As spelt out above, rural godowns construction and facility design play a key role for

accreditation to Warehouse Receipts system as operates in the country today and to

avail of attendant services for availing of pledge loans and commodity trading.

- As it stands, NBHC has franchises country-wide covering a gamut of private, SWC

and CWC warehouses. The general scope of migrating to a WRS will depend on the

godown adhering to technology and design basis detailed above apart from strategic

trading and commercial viewpoints for hiring the godown.

v Corporate – Contract Farming Frameworks & E-Procurement Initiatives

- Key initiatives have been undertaken by leading Indian and MNC corporate houses

with the active support of state governments to set up integrated supply chains for

agricultural products. Procurement models over the last 5 years include the multi role

E-Choupals of ITC Limited, Shriram Groups Hariyali, Mahindra & Mahindra’s Shubh

Labh and the Contract Models of Rallis India, PepsiCo, Escorts Limited programs

which conduct custom production, post harvest and procurement programs in the

agriculturally dominant states. Leading processing houses like Satnam Overseas,

KRBL, and United Breweries have also started direct programs for meeting their raw

material needs, to have control over the supply chain and gain pricing and access to

farmers.

- To facilitate direct procurement, state governments have stepped in with amending

APMC Acts and exempting procurement related taxes and duties. The corporate /

contract farming models work on a specific crop program integrating farmers,

providing standardised inputs and technical support and perform procurement

functions.

- The implications for storage needs are clearly in the fact that these companies will

need larger scale storage for both input and output, which would have facilities for

post harvest operations, quality and standardisation. Typically, models are worked

out on a basis of procurement and technical centers and the need for quality

godowns is clear.


51

v Technology Initiatives - Bulk Handling Storage & Transport Systems

- India’s first large scale [1.8 million ton] bulk grain handling silo storage and rail

transport infrastructure is being set up by Adani Group on the basis of 100%

dedicated use for 1st 10 years and 75% for the next 20 years. So far, experimental

efforts were made for silo storage of grain. This marks a departure towards two

significant paths, [a] introducing world class systems for handling, storage and rail

transport to offer higher quality and reduce post harvest losses and [b] development

of large scale integrated facilities with private sector development.

- The ramifications on existing storage are clear that Central Pool stocks may migrate

to such networks given the past record of losses on storage and subsidy quantum’s

using traditional systems of storage. It is also imperative to improve design and

configuration of godowns beyond basic storage for warehouse safety, quality

retention, stock management and overall yield given the needs of both the Central

Pool and the growing trend of well equipped warehouses accredited to Commodity

Exchanges.


52

5 SUGGESTIONS & RECOMMENDATIONS

From the findings of the evaluation study, it can be seen that the rural godowns scheme has

been generally successful and has been able to meet many of its objectives. However, there

are certain key issues that need to be considered and/or strengthened. These are:

§ Expanding the scheme beyond 2006-2007

§ MIS

§ Training and awareness; and

§ Choice in the nature of loan repayment The subsequent sections of the report outline the nature and scope of improvements in the

scheme.

5.1 Expansion of the Scheme beyond 2006-2007 The Central Sector Scheme for Rural Godowns has met the primary objectives well. The

recent trends in corporatisation of Agribusiness, development of national level commodity

markets linked to WRS System & agricultural marketing revisions as well as the private

sector initiatives for storage development will impact scope for need and quality of storage

space.

Projected Storage Gap Estimates (in million tons) @ CAGR % [Foodgrains, Cotton, Oilseed, Spices]

0.5% 1.0% 1.5% 2.0% 2007 - 2008 98.48 100.90 103.35 105.80 2008 - 2009 99.33 102.61 105.94 109.32 2009 - 2010 100.18 104.34 108.58 113.44 2010 - 2011 101.02 106.08 111.26 116.56 2011 - 2012 101.88 107.84 113.97 120.44

Conservative growth estimates in agricultural production could mean a 98 million ton gap by

2007 – 2008 between production and storage rising to just over a 100 million tons by 2011 –

2012. As per the CAGR evidenced over the last decade of about 1%, gap in 2007 – 2008

will be 100 million tons rising to 107 million tons by 2011 – 2012. Should India experience

higher production either on account of bumper crop, area under production or yield rises, the

gap can be depicted by higher growth estimates.

Prima facie, the scheme therefore has adequate scope to be extended to meet multi level

needs of small farmers, medium scale farmers, large farmers as well as co-operatives and

private sector players in view of the projected storage gaps.

§ As such, it is recommended that DMI follow an umbrella approach to meet the storage

needs of all types of godown developers (state corporations, co-operatives, private

traders and farmers) without imposing any caps on the capacity that a state can develop


53

under the scheme and to follow promotional thrust for the states (outside of 99%

concentrated in 15 states) which have availed low assistance

§ It is also recommended that the scheme be appropriately modified to support both

developments of WRS compatible models as well as facilitate upgradation of existing

godowns to WRS levels

§ It is also further recommended that the scheme consider revising cost, design and other

specifications for the godowns and incorporate these elements in its future plans.

In doing so, it may be worthwhile to keep in mind that the cost of construction has risen

based on rising prices of input materials. As such, it is suggested that DMI develop

benchmark cost estimates across the spectrum of godowns to cover crop – area - quality

aspects, infrastructure and facility standards and basic qualities needed for warehouse

accreditation under NCDEX, MCX and specialised corporations like National Bulk

Handling Corporation [a subsidiary of MCX]. Alongwith the cost estimates, DMI may

consider developing a basis for periodic evaluation of rates of construction.

§ DMI should concentrate on a mixed strategy of encouraging farmers to participate in the

scheme, involve promising area - crop specific state with promotions and enable the

development of the listed initiatives above through the scheme.

In the event that DoAC decides to carry the scheme into the next Five Year Plan, it is

imperative that improvements in MIS, enhancing the scope of training and awareness

creation and changing the nature of the subsidy release mechanism be brought about.

Recommendations on these issues are highlighted in the subsequent sections.

5.2 Improved MIS During the course of the evaluations study, it was found that there was no centralized

database from which one could get an overall picture about the scheme. So much so that

even names of the godowns owners, addresses of the godowns, capacities created, profile

of the owners, etc. were not readily available. Moreover, every state had a different format

for collecting and disseminating even this basic level of data making it extremely difficult for

the managers of the scheme to get an overall picture to take management and/or policy

decisions.

To overcome this weakness, it is strongly recommended that a robust MIS be created and

implemented which could make such information easily available on demand.


54

As such, at the time when an entrepreneur approaches the financing bank for assistance in

constructing a godown, along with the project report, necessary land documents, etc.

information on the profile of the entrepreneur as indicated in Annexure 8 also needs to be

collected in quadruplet.

While the local branch of the financing bank would need to retain one copy of the

information collected in the format suggested in Annexure 8 above and the other mandatory

documents (viz. project report, copies of land documents, etc.), a copy of the information

collected through Annexure 8 needs to be forwarded to the Bank’s Regional Office /

Headquarters, one to the local NABARD office and one copy to DMI’s regional office.

The DMI regional offices need to compile the information collected through Annexure 8 on

easily retrievable database management software (for example MS Excel or MS Access) in

standardized formats and send soft copies of this information to the DMI Headquarters in

Faridabad on a quarterly basis.

Establishing protocols for the timely collection and dissemination of information, adhering to

the same, standardizing the formats in which the collected information is stored and

ensuring uniformity in the use of a standard database management software in which the

collected information is stored will, over a period of time, help DMI in improving the

management of the rural godowns scheme and in ensuring far better monitoring and

evaluation mechanisms.

5.3 Expanding the Scope for Training & Awareness From the understanding of NIAM’s programs and work done and the detailed field survey, it

was found that the local financing banks had played a major role in ‘selling’ the concept of

rural godowns to the local entrepreneurs. Awareness creation and publicity of the scheme

was very limited at the grassroots level and restricted only a few states and programs where

NIAM conducted which may be a major reason behind farmers, especially small farmers not

knowing of the scheme as much as was envisaged.

Hence in order to popularize the scheme at the grass roots level and improve the off take of

the scheme, the following steps are recommended:


55

5.3.1 Involving NGOs in Awareness Creation and Training Local NGOs, given their presence in the villages and their on-going work with rural

communities at the village level, can play a major role in creating awareness about the

scheme and then providing training to small farmers in scientific aspects of storage.

As such, DMI’s regional offices could create a database of all NGOs working in the districts

of their respective states. On creation of such a database, the regional offices could select

an appropriate number of NGOs that work with farmers in the field of agriculture and rural

development. Representatives of these NGOs should then be invited for an

orientation/awareness creation workshop about the scheme and be invited to work in

partnership with the Government to popularize the scheme in the areas in which they work.

It is possible that only a few of the NGOs invited for the orientation/awareness creation

workshop would attend the workshop, and of these, a smaller number may wish to

undertake the task of popularizing the scheme. However, the NGOs that wish to work with

DMI could then be given a more thorough orientation of the mechanisms envisaged by the

DMI to manage the scheme and representatives of these NGOs could be sent to NIAM for a

more rigorous training.

On completing the training and coming back to the field, the NGOs would be expected to

evolve their own mechanisms to create awareness about the scheme amongst the rural

communities; train interested farmers and local entrepreneurs in making project reports and

meeting the other requirements of the scheme, assist them in developing proposals and

project reports and pre-screen applications from the interested parties and assist the

farmers in co-ordinating with the local financing banks and DMI.

After the sanction of the project to the entrepreneurs availing of the scheme through the

NGOs, the NGOs would be required to train these entrepreneurs in scientific aspects of

storage and ensure that the entrepreneurs construct the godowns as per the mandatory

specifications and that storage takes place in the godowns along the same lines. On

completion of the godowns and release of the final installment, a certain proportion of the

project cost should be made available to the NGOs as fees/commission for their efforts

towards popularizing the scheme.


56

5.3.2 Suggested Training Modules The farmers/local entrepreneurs ought to be provided training on issues such as enhancing

the viability of the project and highlighting areas where the beneficiaries can maximize their

incomes not only from enhanced capacity utilization, but also from a smart play in the

marketplace to get higher remuneration for the produce stored in the godowns.

Since a majority of the godown owners don’t have high levels of educational qualifications, it

is necessary that training inputs be provided to develop entrepreneurial skills. As such, the

training programme must have a basic capsule on development of entrepreneurial skills and

understanding business risks. This module needs to be conducted right after the

beneficiaries’ application for the construction of the godown has been approved. It is

expected that with such a training input, the beneficiaries would follow the basic scientific

management approaches in managing their godown operations. In addition, the training

module should also cover issues such as: § Basic management of the godown, repair and maintenance

§ Account keeping,

§ Business development: capacity utilization through multi-product storage A second training module on quality management also needs to be imparted to the

entrepreneurs to help the entrepreneur to maintain the quality of stored produce or

maximize benefit from storage. This module could include, but not be restricted to issues

such as:

§ Crop/product specific storage practices

§ Grading and standardization In addition, a third training module may be considered to enable the entrepreneurs to take

advantage of, and add value to the rural economy through emerging marketing systems like

Warehouse Receipt System and trading through commodity exchanges. This training

should be given jointly with the commodity exchanges so that the entrepreneurs are trained

to meet the criteria and requirements of these exchanges. 5.3.3 Training Institutions: Keeping in view the dispersion of the scheme in terms of geographical spread and extensive

coverage of agro climatic zones, it is suggested that NIAM be given the responsibility to

develop Master Training Modules which can thereafter be implemented using specialised

trainers locally, where NGO’s, State Agriculture Departments and Co-operative Training


57

Institutes may be the local resource to fully utilize the scheme as per local area conditions

matched to the quality standards of the Master Training Program.

For NCDEX / MCX and their warehousing counterparts, it is suggested that the training for

upgradation of potential godowns be carried out in partnership with the Exchanges and their

technical counterparts.

5.3.4 Awareness creation In addition to newspaper advertisements, NIAM could consider using radio spots in the local

radio channels (All India Radio, etc.), seminars, focused workshops in potential areas, local

cinema halls (before the beginning of movies and at the ‘interval’ period), creative posters

and pamphlets, etc. in popularizing the scheme amongst the rural communities.

Awareness creation may now be considered on a state potential basis where DMI estimates

both a higher need for storage and availability of scheme for the state. So far, the

dominance of the scheme has existed in food grain production belts where the state limits

on scheme support are being approached. For other areas with non foodgrain production

capability, wherever possible, joint awareness programs can be conducted alongwith state

agencies, specialised agencies of both the Central and State governments. For instance, for

states like Andhra Pradesh, Rajasthan, Madhya Pradesh, and Kerala which dominate spice

production; efforts may be made alongwith state government departments and agencies as

well as the Spice Board. Similarly, for Coffee in Karnataka, Kerala and Tamil Nadu, with the

Coffee Board and for NTFP with the various specialised agencies like TRIFED and others.

It may also be considered useful to discuss with the non FCI agencies mandated with

maintaining MSP and commodity procurement functions to promote the scheme, for

instance agencies like NAFED. For the co-operative sector, the major success in

agribusiness have been the various milk federations structured to link to villages and small

farmers. NIAM may consider developing special programs for the co-operatives in order to

develop storage either as co-operative owned godowns or as a promotional path for

developing small farmer godowns along the milk chain.

5.3.5 Meetings with Local Community Leaders / Ongoing Initiatives It is also recommended that the DMI officials, on their Joint Inspection/other visits to the

villages, make a conscious effort to seek out and meet the village sarpanch, and other

village elders to create awareness about the scheme. In addition, DMI could also orient

Agriculture Extension officers and the Block Development Officers in the States and hand


58

over copies of the posters/pamphlets for them to distribute during their visits to the villages.

States have ongoing programs for farmers development covering various links from

production, post harvest, marketing and processing which are conducted by Central, State

and even internationally funded efforts. DMI can interface with the State agencies to

evaluate the scope for usage of the scheme within the programs and thereafter lead the

initiative to utilize the scheme.

It is envisaged that a combination of all these efforts would have a significantly positive

impact on popularizing the scheme and encourage larger numbers of farmers and other

entrepreneurs to avail of the scheme.

Documents

Rural Go Down Evaluation