Model Answer

Primary Agricultural Credit Societies (PACS) are grassroots-level cooperative institutions in India that play a vital role in the rural credit system. With over 100,000 PACS serving more than 130 million farmers, they significantly contribute to the storage and marketing of agricultural produce.

1. Storage Facilities and Infrastructure Development: PACS help in establishing storage facilities at the village level, which is essential in reducing post-harvest losses. These facilities enable farmers to store their produce safely, preserving it until the market prices are favorable. This contributes to preventing distress sales, where farmers are forced to sell at low prices due to a lack of storage options.
2. Marketing Support and Market Linkages: PACS aggregate produce from small and marginal farmers, collectively marketing it to increase bargaining power and market reach. By establishing direct linkages between farmers and buyers, PACS help in ensuring better prices for farmers, reducing the dependency on middlemen.
3. Credit Provision: PACS offer pledge loans and post-harvest loans against the stored produce. These loans provide farmers with financial assistance without the need to sell their produce immediately, allowing them to wait for better market conditions.

Importance of the ‘World’s Largest Grain Storage Plan in the Cooperative Sector’

The “World’s Largest Grain Storage Plan in Cooperative Sector” is an initiative aimed at transforming the storage and marketing infrastructure for agricultural produce in India.

1. Enhancing Storage Capacity: This plan seeks to address the current shortage of 166 million metric tons (MMT) of storage space. By modernizing existing facilities and constructing new ones, the initiative will significantly increase storage capacity, preventing post-harvest losses.
2. Reducing Post-Harvest Losses: The introduction of modern storage facilities and processing units will help reduce post-harvest losses, which are currently as high as 5-13% for fruits and vegetables and 3-7% for crops.
3. Improving Farmer Income: The availability of storage facilities near farms will allow farmers to avoid distress sales, thus improving their income stability and financial wellbeing.
4. Strengthening the Cooperative Sector: By enhancing the capacity and role of PACS, the plan aims to empower these institutions, strengthening the cooperative sector and benefiting farmers.

This plan represents a significant step in decentralizing grain storage in India and promoting a ‘whole-of-Government’ approach to food security and agricultural development.

Model Answer

Small and marginal farmers in India face significant challenges due to underdeveloped and fragmented marketing infrastructure. These farmers, who make up nearly 85% of the farming population, often struggle to access markets that can provide fair prices for their produce. Some of the key impacts include:

1. Limited Market Access: Farmers often have to sell their produce in local and unorganized markets, which offer lower prices. According to the National Institute of Agricultural Marketing (NIAM), the lack of access to distant markets restricts farmers from maximizing their profits.
2. Post-Harvest Losses: India experiences significant post-harvest losses, with up to 30% of horticultural produce lost annually due to inadequate infrastructure (APEDA). These losses reduce the amount of produce available for sale and affect farmers’ earnings.
3. Information Asymmetry: Without access to market information, such as price trends or demand forecasts, farmers often make suboptimal marketing decisions, leading to lower profits.
4. Exploitation by Middlemen: Small farmers often depend on middlemen who charge high commissions, reducing the farmers’ share of the profit.

Role of Farmer Producer Organisations (FPOs) in Enhancing Marketing Efficiency

Farmer Producer Organisations (FPOs) can play a critical role in improving the marketing efficiency for small and marginal farmers by providing them with the following advantages:

1. Collective Bargaining Power: FPOs help farmers join forces to negotiate better prices for their produce. For example, Amul’s cooperative model empowers dairy farmers to secure higher prices for milk, increasing their income.
2. Infrastructure Development: FPOs like LEAF have built facilities for sorting, grading, and packaging, which add value to the produce and reduce post-harvest losses.
3. Value Addition and Branding: FPOs also enable farmers to create branded products, as seen with SIMFED’s ‘Himalaya’ brand, which helps organic farmers in Sikkim sell their produce at premium prices.
4. Market Linkages: By developing direct market linkages, FPOs, such as the Uralungal Labour Contract Co-operative Society in Kerala, help farmers bypass intermediaries and sell directly to buyers, ensuring better prices.

By addressing gaps in the marketing infrastructure, FPOs can significantly improve farmers’ incomes and contribute to the goal of doubling farmers’ income. However, more work is needed to ensure that the entire infrastructure is accessible and efficient.

Model Answer

Key Challenges in Agricultural Produce Storage in India

1. Insufficient Storage Capacity
   India’s current food grain storage capacity is 145 million metric tonnes (MMT), which is far less than the total food production of 311 MMT, creating a storage gap of 166 MMT. This shortage limits the ability to store surplus grains, especially during peak production seasons, leading to inefficiencies and losses.
2. Unscientific Storage Practices
   Many storage facilities lack proper hygiene and infrastructure, resulting in post-harvest losses due to spoilage and infestation. For example, about 10% of the 1,000 lakh metric tonnes of wheat produced annually are lost due to inadequate storage methods. These practices compromise the quality of food grains.
3. Regional Disparity
   Storage capacity is unevenly distributed across states. While southern states boast a storage capacity close to 90% of their food production, northern states like Uttar Pradesh and Bihar fall short, with storage capacity below 50%. This regional disparity exacerbates food security concerns in areas with inadequate storage.
4. Inadequate Cold Storage Facilities
   Cold storage is crucial for preserving perishable items like fruits and vegetables, but India faces a shortage in this area. Most existing cold storage is allocated for potatoes, leading to significant post-harvest losses for other crops. This lack of infrastructure affects the overall efficiency of the agricultural supply chain.

Measures to Address Storage Challenges

1. Ramp Up Scientific Storage Methods
   India must scale up the use of metal silos, which provide better and more scientific storage options. This will improve the handling and longevity of grains, reducing losses.
2. Decentralize Storage Infrastructure
   Storage facilities should be decentralized and set up at the village and Panchayat levels. This is particularly beneficial for small farmers who do not have access to large storage units.
3. Liquidate Excess Stock Efficiently
   Excess agricultural stock should be managed through measures such as exports or selling surplus in open markets. This would reduce pressure on existing storage facilities.
4. Encourage Private Participation
   Private investment in agricultural storage, including cold storage and warehouses, should be incentivized. Encouraging competition will reduce costs and improve infrastructure availability.

The government is already implementing measures like the SAMPADA Yojana and Save Grain Campaign to improve storage. The establishment of an Inter-Ministerial Committee for a large grain storage initiative in the cooperative sector further aims to address these gaps