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LATEST NEWS UPDATES | 'Foodgrain warehousing demand to grow up to 6% in next 5 yrs'

'Foodgrain warehousing demand to grow up to 6% in next 5 yrs'

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published Published on Sep 19, 2013   modified Modified on Sep 19, 2013
-PTI


MUMBAI: The demand for foodgrain warehousing is expected to grow by 5-6 per cent annually in the next five years, according to a report by Rabobank.

The growth will be driven by a range of factors, including the government focus on food security, current storage space shortage and the recently announced National Food Security Bill, Rabobank analyst Vaishali Chopra said.

"The country must see improvements to its existing storage system as well as the creation of additional storage capacity to meet the demand of increased food production," she added.

"Currently, the majority of storage facilities are government-owned and increased participation from the private sector will be needed to make up the difference," she added.

The report said storage construction required significant investment, which is better suited for large corporate players.

These large private sector players, participating in agri-related and infrastructure projects, will look for a conducive investment environment, triggered by the increasing cost of land, labour shortage and focus on food security, it said.

Storage capacity, price fluctuations, excessive government controls, acquisition of land for large-scale projects and long gestation periods collectively play their part in curtailing private sector investment, it said.

"Once the sector is relatively free of government control, these companies are expected to bring their knowhow and experience to India's grain warehousing industry in the long term," the report said.

Silo storage, unlike traditional go-downs, significantly reduces grain losses due to bad weather, pest infestation and pilferages, while also reducing grain maintenance and storage costs in the long term, it said.

In addition, the report said, requirements for labour, handling and packaging are significantly reduced in silo storage.

Collateral management agencies will be instrumental in pushing investment in storage capacity through the development of modern silos, it added.


The Economic Times, 18 September, 2013, http://economictimes.indiatimes.com/news/economy/agriculture/foodgrain-warehousing-demand-to-grow-up-to-6-in-next-5-yrs/articleshow/22720178.cms


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