Cooperative Grain Terminal - Free storage to farmers

COOPERATIVE GRAIN TERMINALS
Farmer Friendly Post Harvesting Strategy
Assuring
Virtually Free Grain Storage to Farmers
PK Bhardwaj - https://www.linkedin.com/in/pkbhardwaj
Note : Photographs used in this presentation are taken from internet for illustration purpose only
My Views…….

One Strategy….Benefits All … Total Inclusive Growth
 Regenerate Farmer's losing interest in farming since no one bear their loss
 Assure that profit is shared with farmer from sales proceeds so that farmer gets good return on his
investments
 Facilitate easy upgradation of Aadhti from a Broker to a Mandi (Cooperative Grain Terminal) Owners.
 Reduce Storage and Handling Cost of Grain
 Upgradation of Post Harvesting Technology to enhance Grain quality and minimizing grain rotting.
 Improvement in Govt’s decision making by providing them Real time data on availability of grain
qualitatively and quantitatively to plan
 1) Export
 2) Next Crop Variety and Quantity
 3) Price Control
 Assures enhancement of overall Quality of grain
 Results in development of Big Post Harvesting Industry
……….and the Strategy is cost effective, self sustaining
“COOPERATIVE Grain Terminal”
A concept which will become reality one day in India

Cooperative Grain Terminals
(Collectively Managed by Farmers, Agri Universities & Govt.)
1. Real Time monitoring of Quality and Quantity possible.
2. Quick Export / No Export Decisions possible.
3. Next Crop decision could be taken based on available stock

 Cooperative Grain Terminal would actually be a Scientific Storage Facility for grain wherein
grain is stored in Bulk and quantity and quality in real time is maintained scientifically
 Cooperative Grain Terminal may be a collective grain storage of group of villages or wards etc.
which will facilitate farmers to store their grain in bulk in Silos, free for 5 months.
 Cooperative Grain Terminal will act as custodian of grain and sell the grain only when
requested by farmer.
 CGT will be eligible for handling charges from sales proceeds at a set percentage fixed by the
govt.
 CGT will act as a communication medium between Govt. and farmers for
technology/subsidy/information transfer
 Initially CGT could be utilized to store Wheat and Paddy only and it may be initiated from one
state only.
 THE BEST PART IS CGT CONCEPT IS ARE MODULAR AND EXPANDABLE.

Why only Silos for Grain Storage
 Silos ensures Mechanized High Speed Handling of Large Quantity of Grain
in Bulk
 Lower Storage Cost per MT; (Approx Rs. 300/MT/Annum in 50 K Grain
Terminal
 Since Condition Monitoring of Grain is easy in Silos hence economical to
store large quantity in quality manner
 System is Easy to Automate and hence Most International Trade is in Bulk
 In Store Drying and Fumigation is possible
 Reduced Wastage 1% Maximum instead of 10% minimum
 Grain Stored in Silos is of High Quality.

Challenges Ahead…
1. Reducing Cost of Owning a Grain Terminal
2. Setting up Operating Systems to Operate Grain Terminal
that are scientifically accepted worldwide and acceptable to
all
3. Assuring foolproof system by plugging existing quality and
quantity related loopholes.
4. Extending Tax and Duties benefits to people who will come
forward to own a terminal for initial 5 years
5. Setting up a system to provide Free Grain Storage to Former
and also Share Profits from Sales Proceeds with Farmers.
6. Who will fund the Cooperative Grain Terminals
7. Implementation Strategies

1. Reducing Cost of Grain Terminals
 Grain Terminals are not expensive as they are
modular and hence expandable.
 Anyone can start with one or two silos and later
expand depending upon business.
 Railway Siding and Grain Wagons make terminals
very expensive
……One Strategy can drastically reduce Grain Terminal
cost and that is “Grain Movement in Shipping
Containers”

Grain Movement only in
Grain Containers than in Railway Wagons
Accepting Container System
means reduction of Total Grain
Terminal Capital Cost
Savings in Land Cost, MHS Costs,
Railway Infrastructure cost,
Lesser Loading / Unloading cost
Also there will be no resistance
from existing transporters

Advantages of Grain Movement in
ISO Shipping Containers
1
•Containers have flexibility to be moved via road as well as via rail.
•System of moving containers via road as well as via rail already exists.
•3PL services easy to deploy
2
•Since containers are closed, current overloading problem of Trucks will be totally reduced.
•Hydraulic Arrangement to load unload containers is much simpler and cheaper than wagon loading and unloading.
3
•Container is less expensive than Rail Wagons
•Containers can be moved by any freight rail car. No need for special Rail Rake
4
•Big railway infrastructure like railway siding, maintenance staff etc. is not required, hence No Railway Free Time problems
•A long approx 1 Km land length to adjust Railway Siding is also not required
5
•Fumigation of Container is very easy. Container Inspection / Maintenance systems are already in place
•Containers later can get advantage of double stacking in Dedicated Freight Corridor.
6
•Smaller players too can enter this business. Otherwise only bigger players can participate.

2. Setting up Operating Systems for
Stake Holders of Cooperative
Grain Terminal may be
1. Govt or FCI as regulator
2. Owner of CGT
3. Farmer’s Representatives
4. Agri Universities for
Technology
5. Cooperative Banks for
Finance
Cooperative Grain Terminal Management
Re-engineering of Govt
Systems required to deploy
this Concept

Grain Terminals Logistic
Field Grain Delivery in CGTs,
Custodian Cooperative
Grain Terminal
Promissory Note for
MSP + Profit %ge
Grain Selling by CGT,
Bank giving MSP to
former
At the year end, Farmer
getting Profit share
through Bank

Functions
of
Grain
Terminal
Estimates Vs
Actual Grain
Received
Provides
Technical
Inputs to
Farmers
Facilitate
R&D by Agri
Universities
Custodian of
Farmer’s
Grain
Records
Quality &
Quantity of
Grain
Records Soil
& Water Data
Acts as Nodal
Agency
between
Farmers &
Govt.
Supply
Manure &
Pesticides
Justify Loans
& Insurances
FCI or State
Warehousing
Corporations
will act as
regulator
Specific Functions of Cooperative Grain Terminals

Operating Theme
 CGT may provide Free transport to Farmers registered with CGT to bring their produce to the Pool.
 Each Farmer will get free storage for 5 months at pool for their produce thereafter pool facilities may be
provided on chargeable basis
 CGT will quality check all grains and provide receipt to farmer’s for his grain deducting dockage and other
impurities.
 CGT will receive Grain at 12% moisture level and Deliver at 12% moisture level. All calculations shall be done
as per international standard.
 CGT will act as custodian to farmer’s produce until farmer decides to sell his grain to CGT
 Farmers at their will can sell his produce at market price or at MSP whichever is higher to CGT any time
within free 5 months in parts or in full
 CGT will pay market price or MSP to the farmer deducting handling charges fixed by the govt. through bank to
the farmers.

3. Fool-proofing Systems to bring
Efficiency and Productivity
World Class
Labs for
Quality
Checks

Moisture Measurement Principle
W1 x (1-M1) = W2 x (1-M2)
W1 = Initial Weight of Grain
M1 = Initial Moisture Content
M2 = Final Moisture Content
W2 = Final Weight of Grain
Moisture to be tested only with “Commercial Legal
for Trade” Moisture Meters

Advantages of Moisture Adjustment Formula
1
• Grain Receiving at 12% moisture and Delivery at same 12% moisture will reduce all the problems that
leads to wrong practices and habits in the system. And this would be a HUGE BENEFIT IN TERMS OF
QUALITY AND QUANTITY OF GRAIN FOR THE NATION.
2
• Farmers will not be worried about loss if they bring grain at lower moisture to Grain Terminal
• People responsible for storage will not spray water on the grain to increase the weight of grain to siphon
out grain.
3
• Since people will not spray water on grain, the Grain will have lesser tendency to rot.
• Since high moisture grain attracts infestation, people will try to store the grain at moisture less than
12%.
4
• Tendency of people to store grain in open to gain moisture will reduce.
• Farmer’s will be motivated to give better quality grains
5
• International benchmarks of quality could be easily achieved and Buyers will be more attracted to buy
good quality grain.

4. Taxes & Duty and other Benefits to be Extended to
Cooperative Grain Terminal Owners
 Farmer’s should be allowed to bring in their grain
directly to the Cooperative Grain Terminal without
any middlemen
 Market Fee and Rural Development Fee should be
waived off for Grain Terminal Owners
 There must be some other discount in VAT too.
 Agri-Universities must be linked to Grain terminals
for troubleshooting
 They must be allowed to sell the grain at market
price

Cost Benefit of 50000 MT Grain Terminal
S.No Parameters Factors Paddy for Six Months Wheat for Six Months Total
1 Total Storage Capacity Tons 50000 50000
2 Average Price per MT Rs. Per MT 25000 16000
3 Amount of Grain Crore Rs. 125.00 Rs. 80.00 Rs. 205.00
4 Market Fees Crore 2.00% Rs. 2.50 Rs. 1.60 Rs. 4.10
5 Rural Development Fund Crore 2.00% Rs. 2.50 Rs. 1.60 Rs. 4.10
6 Commission Kachha + Pakka Aadhti Crore 3.50% Rs. 4.38 Rs. 2.80 Rs. 7.18
7 Bardana (1/5 of Cost)/MT Crore 216.32 Rs. 1.08 Rs. 1.08 Rs. 2.16
8 Labor Cost Crore 0.60% Rs. 0.75 Rs. 0.48 Rs. 1.23
9 Average Freight per MT Crore 500 Rs. 2.50 Rs. 2.50 Rs. 5.00
10 Grain Storage Cost Crore 200 Rs. 1.00 Rs. 1.00 Rs. 2.00
Total Value of Grain Crore Rs. 139.71 Rs. 91.06 Rs. 230.77
Grain Terminal Owner's Margins
= Sr. No. 4+5+6+7 in one year
Crore Rs. 11.21 Rs. 7.56 Rs. 18.77

5. Free Grain Storage to Farmers
PK Bhardwaj -
https://www.linkedin.com/in/pkbhardwaj
Considering previous slide grain storage cost is only
Rs. 200/- per ton for 6 months.
 Which is only 1% of Grain Value
 CGT owner will have a gross margin of 9.15% of grain
value, if he gets all the benefits.
 Sales will get more profits which too can be shared
with Farmer at 60:40 ratio at the end of the year.

6. Who will Fund
Money is Already Available within the System
Parameters Current Figures
Commission Kachha +Pakka Aadhti 2.5% to 3.5%
Market Fees 2%
Rural Development Fees 2%
Labor 0.6%
Average Freight Rs. 500/ton
Bagging Cost Rs. 216 per ton
Commission Paid to Aadhti Every Year approx 10474 Crore
Gross Yield of Rice in India is approx 1000 Lakh Tons and
For wheat it is approx 960 Lakh tons
If we take average price of Paddy as Rs 25000/ton and Wheat as Rs. 16000/ton
Aadhti Commission = @2.5% of 1000 x 10^5 x 25 000= 6250 Crore for Paddy
And @2.5% of 960 x 10^5 x 16000 = 4224 Crore for Wheat
Total = 10,474 Crore per annum is the commission paid to the Aadhti’s for
nothing.

Pay Commission or Construct Grain Terminals??
Aadhti Commission = Rs 10474 Crore per year
This money can construct 418 Grain Terminals @25
Cr / CGT of 50K tons, excluding Land
This Grain Terminals can Store 209 Lakh tons of grain
– You need Storage of only 1000 Lakh Tons
which means you need only 4 years
One single govt. policy can change India’s Grain Scenario.

7. Implementation Strategies
 All existing Mandis could be converted to Grain Terminals on Build, Own, Operate
and Transfer (BOOT) basis.
 Tax and duties benefits must be extended to Industrialist, Aadhtis or Farmers who
choose to own a small Grain Terminal with expansion option.
 Introduction of “Legal for Trade” moisture meters is must in the system and Receipt
and Dispatch must happen only at Weight at 12% moisture level .
 Bags must be Completely eliminated and all Grain Transaction must happen in bulk
which include receipt, handling, storage and long lead transportation.
 Shipping Container’s must be made compulsory for all grain movements to make
system flexible for Road/Rail/Ship transportation.
 This Concept may be implemented in phased manner, e.g. it could be implemented
in one state before rolling out to another states.

Who can invest in CGT
 Anyone can invest, Farmers and Aadhtis must be preferred, as they
understand grain much better than anyone else.
 Rice Millers, Flour Millers too can Participate as this is win-win
situation for them as they need grain for their operation too
 Commodity Exchange people too can participate.
 Banks can collaborate
 FCI must own approximately 5%-10% of total CGTs to set
benchmarks.

Why “Aadhtis” or Commission Agents
are preferred choice for CGTs??
S.No. Description
1 Aadhtis or Commission Agents are highly skillful people in recognizing grain
quantitatively and qualitatively.
2 They are well aware of tricks of trades and understand the pulse of market much sooner
than anyone else
3 They understand the problems faced by farmers and also by the millers
4 They know everything about grain procurement, storage, handling, trading and logistics
5 Aadhtis are a skilled force which is currently not effectively utilized.
6 AADHTI MUST UPGRADE AND TAKE BIGGER RESPONSIBILITY.
7 They must be given option to own a Mandi e.g. Cooperative
Grain Terminal. INITIALLY THEY CAN START WITH 1 OR 2 SILOS THEN
GRADUALLY INCREASE TO MORE AS IT IS ALL MODULAR

Benefits to Farmers
 Farmers will save on Transport Cost to Mandi
 Farmers will be self motivated to produce good quality grain with minimum dockage and correct moisture
content
 Farmers will get technical guidance directly from the experts
 Farmers will not be in a hurry to sell their produce immediately after the harvest at lower price.
 Farmer’s can stagger their selling to get regular monthly income
 Farmers will save on bagging and stitching charges
 Weighing accuracy and Quality check accuracies will be boost Farmer’s morale
 Transaction time is reduced with mechanized handling of grain and also transactions are more hassle free
 Payment to farmers is routed directly through bank
 Govt eventually can restart Crop Insurance Policies

Indirect Advantages
 Employment Generation due to Development of a BIG Post Harvesting Industry consisting of
Manufacturers, Technocrats, Universities and Repair & Maintenance people
 Water / Soil / Environmental data Generation by CGTs will result in proactive environmental impact
mitigation strategies.
 R&D in Grain Quality Management , more pro-active role for Agri Universities
 Pre-Planning of Crops depending upon available stock
 Transparent System of grain related financial transactions through banks
 Up-gradations of Aadhtis & Farmers will give them more satisfaction
 Better returns for produced grains will result in up-gradation of farming technology
 Return of farmers back to farming business.
 Development in villages
 Increase in Grain Export
 Overall increase in farming skill level

FREE FIVE (5) MONTHS GRAIN STORAGE TO FARMERS
Concept which can
become Reality
Thank You Very Much

Cooperative Grain Terminal - Free storage to farmers

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