Summer Internship Report

on
FOOD MANAGEMENT IN INDIA

Submitted Toward the Partial Fulfillment of Requirement

For the Award of the Degree of

Master of Business Administration (F&C)

Under the Guidence of

Dr.Mohd.Arif Sir

SUBMITTED TO: SUBMITTED BY:

Dr. Mohd Arif Shobhit Shukla
Assistant Professor MBA(F&C)
IMS 180012135400
Batch:2018-2020

Institute of
Management Sciences
University of Lucknow (New Campus) Lko.

CERTIFICATE
This is to certify that the project work entitled “A Introduction of Food
Management In India .”Is a piece of bonafide work done by SHOBHIT
SHUKLA, student of University of Lucknow (IMS), under my guidance
and supervision for the partial fulfillment of the course MBA, at FOOD
CORPORATION OF INDIA.

To the best of my knowledge and belief the thesis embodies the work
of the candidate himself and has been duly completed.

Simultaneously, the thesis fulfills the requirements of the rules and

regulations related to the summer internship of the institute and I am
assured that the project is up- to the standard both in respect to the
contents and language for being referred to the examiner.

Mr. Dr.Mohd.Arif Sir

DECLARATION

2
 I thus proclaim that this venture work done on INVESTMENT IN SHARE
MARKET is my work, completed under the direction of my personnel control The
outcomes announced in this investigation are certifiable, unique and the content is
composed by me.

SHOBHIT SHUKLA

Roll No. 180012135400

ACKNOWLEDGEMENT

3
I am extremely thankful to our Faculty, INSTITUTE OF MANAGEMENT
SCIENCE, UNIVERSITY OF LUCKNOW, LUCKNOW, for his invaluable
support.

I wish to express my profound gratitude to PROF. VINOD SINGH, OSD, IMS,

UNIVERSITY OF LUCKNOW for their kind permission to undergo Internship
report successfully.

I immensely thankful to DR. MOHD. ARIF for his valuable suggestions and
guidance for the completion of Internship report. I express my sincere thanks to
authority of “FOOD CORPORATION OF ONDIA” for guiding me throughout
the work. I thank God Almighty for showering his perennial blessing on me for
giving me the courage to pursue this Internship successfully.

Date: 18/07/201

Shobhit Shukla

MBA(FC).

TABLE OF CONTENTS
1.Certificate

2.Declaration

4
3.Acknowledgments

Chapterisation

4. Introduction 6-17

Literature review..................................17-55

Company Profile and Brief History......56-60

Organization Structure ..........................61-63

Board of Directors..................................64

5.Schemes and Function 65-79

6. Objective of the Project

Research Methodology..........................80-81

Methods of data collection.....................82

Sample design..........................................83-84

Data Analysis............................................85-91

7.Limitations 92

8.SWOT Analysis 93

9.Conclusion 94

10. Bibliography 95

5
 Introduction
OF

FOOD MANAGEMENT IN INDIA

INTRODUCTION

6
The main elements of the Government’s food management policy are procurement,
storage and movement of foodgrains, public distribution and maintenance of buffer
stocks.The foodgrain management policy in India is detailed in the Targeted Public
Distribution System (TPDS) (Control) Order, 2015.
Procurement and storage

Procurement operations are seasonal - Kharif Marketing Season (KMS) starts from
1st October and lasts upto 30 September next year. Paddy/ Rice and coarse grains
like jowar, bajra, ragi & maize are procured during the KMS. The Rabi Marketing
Season (RMS) starts from 1 April and lasts upto 31 March next year. Mostly,
wheat and sometimes barley is procured during RMS. The kharif cropping
season is from July –October during the south-west monsoon and the Rabi
cropping season is from October-March (winter).

Before the start of every marketing season, Department of Food and Public

Distribution convenes a meeting of State Food Secretaries to make advance
arrangements for procurement of food grains/coarse grains. In this meeting, issues
like procurement centers to be opened by Food Corporation of India (FCI) /State
Agencies, arrangement of storage space, evacuation plan for food grains and
arrangement of packaging material are discussed. Based on the estimates given by
the State Food Secretaries, the targets of total procurement for the Central Pool are
worked out in the meeting.

Under the existing procurement policy of the Government of India (GOI) /

Union /Central Government, food grains for the Central Pool are procured by
various agencies such as FCI, State Government Agencies (SGAs) and private rice
millers. Before the start of each procurement season, Govt. of India announces
uniform specification for quality of wheat, paddy, rice and coarse grains. Quality
Control Division of FCI ensures procurement of food grains from procurement
centers strictly in accordance with Govt. of India's uniform quality specifications.
Procurement of wheat and paddy for the Central Pool is carried out on open ended
basis (i.e., accepting all the grains that are sold to it by farmers) at the
declared Minimum Support Price (MSP) fixed by the GOI. In addition, Sates/
Union Territories (UTs) which are presently under Decentralized Procurement
(DCP) scheme also procure food grains for the Central Pool, but directly store and
distribute them under Targeted Public Distribution System[TPDS] and Other
Welfare Schemes (OWS) based on the allocation made by the GOI. Any surplus
stock over their requirement is taken over by FCI and in case of any shortfall in
7
procurement against allocation made by the GOI, FCI meets the deficit out of the
Central Pool.

In order to give relief to the farmers affected by the unprecedented rains &
hailstorms, Central Government may (This was done, for instance, in 2015 for
wheat procurement) relax quality norms for the procurement and also reimburse
the amount of value cut on such relaxation to the States so that farmers get
full Minimum Support Price (MSP).

The procured food grains are taken over from State Government Agencies
(SGAs) and private rice millers into the Central Pool by FCI and are moved from
the procuring states to the consuming states for distribution to the consumers and
for creation of buffer stock in various states. Food grains of the Central Pool are
stored by FCI in both its own godowns and at hired godowns in different parts of
the country. FCI, if so required, may use warehouse receipts as collateral for
financing its operations.

Allocation, Off-take of Food grains and Central Issue Prices

The function of distribution of food grains to the consumers is carried out by the
State Governments through Targeted Public Distribution Scheme [TPDS] and
Other Welfare Schemes (OWS). The food grains are also disposed off by FCI and
State Governments, based on allocation of the GOI through sale under Open
Market Sales Scheme (OMSS) [i.e., selling food grains at predetermined prices in
the open market from time to time to enhance the supply of grains especially
during the lean season and thereby to moderate the open market prices especially
in the deficit regions. Wheat and Rice are also allocated to State Governments for
retail sale through non-PDS Channels under OMSS.].

Allocation of food grains for TPDS is made by the GOI for Below Poverty
Line (BPL), Antyodaya Anna Yojana (AAY) and Above Poverty Line (APL) on
the basis of 1993-94 poverty estimates of the Planning Commission projected on
the population estimates of Registrar General of India as on 1 March 2000 or the
number of families actually identified and ration cards issued by the State
Governments, whichever is less . Allocation for APL category is made depending
upon the availability of stock of food grains in the Central Pool. Allocation policy
of various state governments under various schemes (both central government
schemes and state specific schemes) may be seen here.

8
Based on the allocation made by the GOI, State Governments lift (off-take) the
food grains from the Central Pool for distribution to the consumers through TPDS
and OWS. Distribution of food grains for BPL, AAY and APL is carried out by the
State Governments through TPDS, with a network of many Fair Price Shops (FPS)
spread throughout the country. The State Governments are responsible for
identification of beneficiaries and issue of ration cards.

Food grains from the Central Pool are issued to States at Central Issue Price (CIP)
for distribution under TPDS to serve families of BPL, APL and AAY at rates fixed
by the GOI. Ministry of Consumer Affairs, Food &Public Distribution
Government of India, fixes the Central Issue Prices (CIP) of wheat and rice which
is uniform throughout the country. The CIPs of wheat and rice were last revised by
the Ministry for APL, BPL and AAY in July 2002. In the States where National
Food Security Act has been implemented w.e.f. 2013, the CIP has been further
reduced.

Movement of Food Grains

In order to ensure availability of food grains for TPDS and OWS, and to maintain
reasonable levels of buffer stocks at various strategic locations throughout the
country, FCI undertakes transportation of food grain (wheat and rice) from surplus
States to the deficit States and also within the States by rail, road and reverie
modes. About 90% of all India movement is undertaken by railways and rest by
road and waterways. On an average of 25 lakh bags (each one is 50 KG) of food
grains are transported every day from the procuring areas to the consuming areas,
covering an average distance of 1500 Kilometer. All India Movement Plan is
prepared on monthly basis at FCI headquarters keeping in view the quantity
available in surplus States, quantity required by consuming States, likely
procurement in procuring States, vacant storage capacity both in consuming and
procuring States, and monthly allocation/off-take. An online tracking system for
movement of foodgrains and depot management was launched in March 2016.The
system would provide various types of data regarding stock position, movement,
quality and quantity on line. It would also generate SMS alerts to depot officials,
area manager and other decision making authorities. All the data are available on
dashboard also for top management to monitor centrally so as to help in automatic
reconciliation and generation of MIS reports about foodgrain management.

Buffer Stock Policy of the GOI

9
The concept of buffer stock was first introduced during the IV Five Year
Plan (1969-74).

Buffer stock of food grains in the Central Pool is maintained by the GOI for

(i) meeting the prescribed minimum buffer stock norms for food security,

(ii) monthly release of food grains for supply through TPDS and Other Welfare
Schemes,

(iii) meeting emergency situations arising out of unexpected crop failure, natural
disasters, etc. and

(iv) price stabilization or market intervention to augment supply so as to help

moderate the open market prices.

The Cabinet Committee on Economic Affairs fixes the quarterly minimum

buffer norms i.e. as on 1st April, 1st July, 1st October and 1st January of every
financial year. In addition to buffer norms, Government of India has prescribed a
strategic reserve of 30 lakh tonnes of wheat w.e.f. 01.07.2008 and 20 lakh tonnes
of rice w.e.f. 01.01.2009.

Food grains stock in the Central Pool consists of stock held by FCI, DCP
states and the SGAs for both buffer and operational requirements. While four
months requirement of food grains for issue under TPDS and OWS are earmarked
as operational stocks, the surplus over that is treated as buffer stock and physically
both buffer and operational stocks are merged into one and are not distinguishable.
According to the present practice, the GOI treats the food stock over and above the
minimum norms as excess stock and liquidates them from time to time through
exports, open market sales or additional allocations to states. The buffer stock
figures are normally reviewed after every five years.

The total annual stock of food grains in the Central Pool is distributed over
different quarters of the year depending upon off take and procurement patterns.
The seasonality of production and procurement is thus a decisive factor in
determining the minimum norm of food grains stocks required in a particular
quarter of the year.

As per the of the High Level Committee on Reorienting the Role and
Restructuring of FCI_English.pdf Report of the High level Committee on
Reorienting the Role and Restructuring of FCI, during the last five years, on an

10
average, buffer stocks with FCI have been more than double the buffer stocking
norms. These excess stocks of the FCI, over and above the stipulated buffer stock
norms, lead to inflation in foodgrain prices and also increase the Centre’s fiscal
deficit. The report says that some of the reasons for these excess stocks are export
bans and open ended procurement with distortions (through bonuses and high
statutory levies). An additional key factor as per the report is the lack of a pro-
active liquidation policy. The current system of liquidation of excess stocks
through Open Market Sale Scheme (Domestic) or in export markets is extremely
ad-hoc and slow. The report recommends a transparent liquidation policy that
should automatically come into effect whenever FCI is faced with surplus stocks
over buffer norms. The report stresses the need for greater flexibility to FCI to
operate in Open Market Sale Scheme and export markets whenever needed. For
more details on buffer stock please see here.

Open Market Sale Scheme (Domestic)

In addition to maintaining buffer stocks and making a provision for meeting the
requirement of the Targeted Public Distribution Scheme and Other Welfare
Schemes (OWS), FCI on the instructions from the Government, sells wheat and
rice in the open market from time to time to enhance the supply of wheat and rice
especially during the lean season and to moderate the open market prices
especially in the deficit regions. For transparency in operations, the Corporation
has switched over to e- auction for sale under Open Market Sale Scheme
(Domestic). The FCI conducts a weekly auction to conduct this scheme in the open
market using the platform of commodity bourse NCDEX (National Commodity
and Derivatives Exchange Limited). The State Governments/ Union Territory
Administrations are also allowed to participate in the e-auction, if they require
wheat and rice outside TPDS & OWS.

The present form of OMSS comprises 3 schemes as under:

(i) Sale of wheat to bulk consumers/private traders through e-auction.

(ii) Sale of wheat to bulk consumers/private traders through e-auction by dedicated

movement.

(iii) Sale of Raw Rice Grade ‘A’ to bulk consumers/private traders through e-
auction.

1. FCI was set up in 1965 (under the Food Corporation Act, 1964) against the
backdrop of major shortage of grains, especially wheat, in the country. Agricultural
11
Prices Commission was also created in 1965 to recommend remunerative prices to
farmers, and FCI was mandated with three basic objectives: (1) to provide effective
price support to farmers; (2) to procure and supply grains to PDS for distributing
subsidized staples to economically vulnerable sections of society; and (3) keep a
strategic reserve to stabilize markets for basic foodgrains.

2. In a bid to increase reach of minimum support price (MSP) operations to more

farmers and increase procurement of paddy, the procurement policy has been
modified and private firms have been allowed to procure paddy from farmers in a
cluster, identified by the respective state government in the states of Assam, Bihar,
Eastern Uttar Pradesh, Jharkhand and West Bengal. These states lack necessary
infrastructure and experience in large scale procurement operations and the Food
Corporation of India (FCI), too, does not have a robust procurement mechanism
which often forces farmers to go for distress sale. Private firms would deliver
custom milled rice (CMR) at the FCI or state government-owned agency godowns.

India's food procurement and distribution policy Impact on prices

and welfare
India procures wheat, rice and sugar at a price below the market price and sells
them in ration shops in the urban areas. The rest is sold in the open market.
Various authors (including Dantwala, Mellor, and Hayami et al.) have claimed that
such a policy raises the open-market price to such an extent that it leads to an
increase in the average price received by farmers. They conclude that both
farmers and low-income urban consumers with access to the ration shops gain,
while high-income urban consumers who buy at the open-market price lose. We
argue in this paper that the above result holds only in a special case and under
unrealistic assumptions.

We examine several alternative cases. We find that the impact of the policy
on the average price is either negative or ambiguous. A negative impact implies
that farmers lose from the procurement policy. The impact of the policy on the
average price is unambiguously negative under rationing and an unsegmented
market (access by the rich to the ration shops). Under rationing and market
segmentation, the impact on the average price is ambiguous unless there is
significant queuing at the ration shops in which case the impact is negative. The
impact is also negative under free trade. The inclusion of distribution costs
increases the probability that the policy will have a negative impact on the average
price.

12
Farmers in a spot as FCI halts pulse purchases under MSP
Government-owned food grains procurement agency, Food Corporation of India
(FCI), has suspended purchase of pulses from farmers under the minimum support
price (MSP) operations for the current season.

The FCI claims that it had surpassed the pulse procurement target fixed by

the Ministry of Consumer Affairs in the beginning of the season and is now
looking for ways to dispose its stock. Farmers, however, are feeling trapped
as pulse prices continue to slump, falling over 25 per cent below the minimum
support price (MSP) in the open market. As against an MSP of Rs 5,050 a
quintal, tur is selling at Rs 4,000-4,200 in the open markets.

FCI’s suspension of tur under MSP is likely to force farmers to undergo

distress sales of the commodity. Many farmers held their inventory after harvesting
for the current season amid expectations of a recovery in prices following supply
deficiency. Since, India meets around 23 per cent of its annual pulses demand
through imports, farmers’ strategy of holding stocks for better realisation makes
sense.

“Effective April 22, we have stopped purchase of pulses for the current

season after surpassing the government’s target. Now, we are looking to slow our
pulse procurement in the forthcoming rabi season,” said a senior FCI official.

According to the official, the Ministry of Consumer Affairs had set a

procurement target of two million tonnes of pulses for the current season. As per
the plan, FCI distributed the stocks it procured for kharif and rabi season to the
extent of 1.55 million tonnes and 0.45 million tonnes respectively. Informed
sources said that the government agency surpassed the target for the
current kharif season, procuring over 1.1 million tonnes of tur alone, and over 0.45
million tonnes of other varieties.

The agency has now started auctioning pulses. As per the official, FCI would give
first preference to departments under the Ministry of Defense, such as paramilitary
forces and other departments to dispose off the procured pulses, mainly turn.

It has also initiated dialogues with some state governments for selling its stock of
pulses which, according to the official, would be the second priority. The third and
last priority, however, would be market intervention i.e. selling in the open market
which often takes place when the price firms up suddenly.

13
 Meanwhile, farmers feel trapped in the price fall saga. After tur dal
surpassed Rs 200 a kg in the retail markets last year, the local government of many
states encouraged farmers to bring in additional area under pulses to fetch extra
incomes. Tur dal is selling at Rs 60-65 a kg today.

“Farmers felt that the government would ensure at least Rs 5,050 a quintal
for tur and that there would be an underwritten price for other pulses as well.
However, the government agencies are no longer procuring. This would force
farmers to sell their stocks at lower prices,” said a senior Mumbai-based pulses
trader and importer.

Meanwhile, traders have started making the most of the situation. They have
started offering Rs 3,000–3,200 a quintal to tur farmers. Pulse prices declined this
year following forecast of a sharp increase in local output. The Ministry of
Agriculture forecasts 4.23 million tonnes of turn output for the current season
compared to 2.56 million tonnes for 2015-16. The overall pulse output in India is
estimated to remain at 22.14 million tonnes for 2016-17, compared with 16.35
million tonnes last year. India imported around 5.5 million tonnes of pulses in FY
2016-17.

Food production & availability-Essential prerequisites for

sustainable food security
Food production is the base for food security. The internationally accepted
definition of food security is that given by the Food and Agriculture Organization
of the UN (FAO) in the Rome Declaration on World Food Security, 1996, further
refined in the FAO's State of Food Insecurity in the World, 2001. “Food security
[is] a situation that exists when all people, at all times, have physical, social and
economic access to sufficient, safe and nutritious food that meets their dietary
needs and food preferences for an active and healthy life

Three dimensions viz. availability, access and absorption are encompassed in

the definition ─

 Availability refers to the physical availability of food stocks in desired

quantities. Using food grains as a proxy for food (reasonable enough in a
context where food grains account for a large share of food intake), availability
of food grain is given by domestic production net of feed, seed and wastage
plus net imports plus draw-down of stocks. Physical availability in any location

14
 within a nation depends on storage and transport infrastructure and market
integration within the national territory.
 Access is determined by the bundle of entitlements, related to people's initial
endowments, what they can acquire (especially in terms of physical and
economic access to food) and the opportunities open to them to achieve
entitlement sets with enough food either through their own endeavors’ or
through State intervention or both.
 Absorption is defined as the ability to biologically utilize the food consumed.
This is in turn related most crucially to the availability of safe drinking water,
sanitation, a hygienic environment, primary healthcare and also to nutritional
knowledge and appropriate practices.

Strategies to increase food production and productivity

It is clear that India will remain a predominantly agricultural country during most
of the 21st century, particularly with reference to livelihood opportunities.
Therefore, there is a need for both vision and appropriate action in the area of
shaping our agricultural destiny. Our major agricultural strengths are our large
population of hard working farm women and men, our varied climatic and soil
resources, abundant sunshine throughout the year, reasonable rainfall and water
resources, a long coast line and rich agro-biodiversity. Converting these into jobs
and income is the challenge. There are however, several available areas of
improvement for increasing the levels of production and productivity and
improving the lives of the people dependent on agriculture and allied activities. An
integrated crop livestock/fisheries farming system has to be the way forward for
the country.

The Green Revolution had been largely confined to irrigated farming areas
and to rice and wheat. The per unit area productivity of Indian agriculture today is
much lower in India as compared to other major crop producing countries.Access
to timely and adequate credit and effective crop insurance are two other crucial
factors. There is also the issue of remunerative price. Ideally, given that the
majority of our farmers are small and marginal in nature with land holdings of less
than five acres, organization of small farmers’ horticulture, cotton, poultry,
aquaculture and other estates, to promote group farming

15
Literature review

16
FOOD MANAGEMENT SYSTEM IN

FCI

Procurement
The Government policy of procurement of Food grains has broad objectives of
ensuring MSP to the farmers and availability of food grains to the weaker sections

17
at affordable prices. It also ensures effective market intervention thereby keeping
the prices under check and also adding to the overall food security of the country.

FCI, the nodal central agency of Government of India, along with other State
Agencies undertakes procurement of wheat and paddy under price support
scheme . Coarse grains are procured by State Government Agencies for Central
Pool as per the direction issued by Government of India on time to time. The
procurement under Price Support is taken up mainly to ensure remunerative prices
to the farmers for their produce which works as an incentive for achieving better
production.

Before the harvest during each Rabi / Kharif Crop season, the Government of India
announces the minimum support prices (MSP) for procurement on the basis of the
recommendation of the Commission of Agricultural Costs and Prices (CACP)
which along with other factors, takes into consideration the cost of various
agricultural inputs and the reasonable margin for the farmers for their produce.

To facilitate procurement of food grains, FCI and various State Agencies in

consultation with the State Government establish a large number of purchase
centres at various mandis and key points. The number of centres and their locations
are decided by the State Governments, based on various parameters, so as to
maximize the MSP operations. For instance for Wheat procurement more than
18,000 procurement centers are operating in RMS 2018-19 & for Rice
procurement more than 35,000 procurement centres are operating in KMS 2017-
18. Such extensive & effective price support operations have resulted in sustaining
the income of farmers over a period and in providing the required impetus for
higher investment in agriculture sector for improved productivity.

Whatever stocks which are brought to the Purchase centers falling within the
Government of India’s specifications are purchased at the fixed support price. If
the farmers get prices better than the support price from other buyers such as
traders / millers etc., the farmers are free to sell their produce to them. FCI and the
State Government/its agencies ensure that the farmers are not compelled to sell
their produce below support price.

18
Policy and System
1. The Central Government extends price support to wheat and paddy through FCI
and State Agencies. Procurement at MSP is open ended i.e., whatever foodgrains
are offered by the farmers ,within the stipulated procurement period and which
conforms to the quality specifications prescribed by Government of India, are
purchased at MSP (and bonus/incentive ,if any)  by the Government agencies
including FCI for central Pool. Some States also declare State bonus on wheat and
paddy over and above MSP.

Government agencies undertake MSP operation at mandis/ temporary purchase

centres/aggregation points. Location and number of purchase centres to be opened
are decided in consultation with /by the State governments.

2. Systems of procurement:

2.1 Wheat - FCI undertakes direct procurement in non-DCP states. In the major
procuring states like Punjab and Haryana, wheat is mainly procured by state
agencies and they preserve the stocks under their custody for which carry –over
charges are paid to them. FCI takes over the stocks for dispatch to consuming
states as per requirement /movement plan. Payments are made to state govt.
/agencies as per cost sheets issued by Governemnt of India after taking over the

19
stocks. In the states like UP and Rajasthan, the wheat procured by state agencies is
immediately taken over by FCI for storage /dispatch.

In DCP state like M.P, wheat is procured by the State agencies and only the surplus
wheat stocks over & above the State’s requirement under TPDS/NSFA and Other
Welfare Schemes are taken over by FCI for dispatch to other consuming regions.

2.2Rice –Custom MilledRice CMR is manufactured by milling paddy procured by

State govt. /State agencies and FCI. In the states like A.P, Telangana, Punjab,
Haryana, Chhattisgarh, Odisha, MP, Tamilnadu, Maharasthra, UP & Bihar paddy
is mainly procured by State government /State agencies and the resultant rice is
delivered to State Government and FCI by getting the paddy milled from rice
millers.

Major responsibility of procurement of wheat and paddy is borne by the State

agencies whereas FCI procures almost 70% of total rice procured for Central Pool.

2.3 Coarse grains- Coarse grains are being procured by the State governments
for central pool.

3. In major wheat and paddy procuring States like Punjab, Haryana & some parts
Rajasthan procurement from farmers is undertaken by the FCI/State Agencies
through Arhatiyas as per APMC Acts of the concerned State for which commission
@ 2.5% of MSP is paid in the States of Punjab & Haryana and @2% in Rajasthan.
In other States like MP, Chhattisgarh, UP, Uttrakhand, AP, Tamilnadu, Bihar,
Jharkhand, Odisha, West Bengal procurement is made through Co-operative
societies and they are paid fixed remunerations at following rates-

Wheat: Rs 27.00 /Qtl

Paddy (Grade ‘A’):  Rs 32/Qtl

Paddy (Common) : Rs 31.25/Qtl

4.Centralized and Decentralized procurement systems:

4.1 Centralized (Non-DCP) procurement system:

Under centralized procurement system, the procurement of foodgrains in Central
Pool are undertaken either by FCI directly or State Govt. agenciesprocures the
foodgrains and handover the stocks to FCI for storage and subsequent issue against
20
 Government of India allocations in the same State or movement of surplus stocks
to other States. The cost of the foodgrains procured by State agencies is reimbursed
by FCI as per cost-sheets issued by Government of India as soon as the stocks are
delivered to FCI.

4.2 Decentralized (DCP) Procurement

Under DCP system, the State Government of India/its agencies procure, store and
distribute (against Government of India’s allocation for TPDS & OWS) rice
/wheat/coarse grains within the state. The excess stocks (Rice & wheat) procured
by the State /its agencies are handed over to FCI in Central Pool. The expenditure
incurred by the State Government on procurement, storage and distribution of DCP
stocks are reimbursed by Government of India on the laid down principles. The
expenses such as MSP, arhatiya/society commission, administrative charges,
mandi labour charges, transportation charges, custody & maintenance charges,
interest charges, gunny cost, milling charges and statutory taxes are reimbursed on
actual basis.  The cost of excess stocks handed over to FCI is reimbursed by FCI to
the State Government/agencies as per Government of India costs sheet.

The Decentralized Procurement Scheme was launched in 1997-98. This scheme

changed the method of procurement of foodgrains in India to the central
government stock. Due to the provisions of this scheme, the foodgrains for the
central governments stock was collected through state governments rather than
the Food Corporation of India (FCI).
All the foodgrain was procured at the Minimum Support Price(MSP) which was
decided by the central government. This was done to ensure:
 A cost which covers the price of production by the farmers.
 Ensure that foodgrain is supplied to those who need it at a reasonable price via
Public Distribution System (PDS) to ensure food security.

Working
 The State Government itself agrees to the straight purchase of paddy and wheat
and procurement of levy rice on behalf of Government of India.

 The state government opens purchase outlets as per its requirement.

21
 The state government then procures all the food grain through TDS and various
welfare schemes.
 Whenever the total allocation made by the state government is less than the
requirements of the TDPS then the central government meets this shortage
through the Central Pool stock.
The total expenses incurred by the State Governments on the procurement
operations as per the approved costing will be agreed to be covered by the Central Government.

Objectives of Decentralised Procurement Scheme

 Increase the procurement volume at the lowest price.

 Ensuring that maximum procurement is done from the local farmers so that the
farmers get the benefits of Minimum Support Price (MSP)

 Decreasing the transaction cost to increase the procurement efficiency and PDS.

 Decrease the expenditure on food subsidy.

As on date the following States are procuring rice/wheat
under DCP system.

22
Procurement of Foodgrains
Procurement operations are seasonal - Kharif Marketing Season (KMS) starts from
01st October and lasts upto next 30th September of a year. Paddy/ Rice and Coarse
grains like jowar, bajra, ragi& maize are procured during the KMS. The Rabi
Marketing Season (RMS) starts from 1st April and lasts upto next 31st March of a

23
 year. Mostly, wheat and sometimes barley is procured during RMS. 3.2 Before the
start of every marketing season, the Department convenes a meeting of State Food
Secretaries to make advance arrangements for procurement of foodgrains/ coarse
grains. In this meeting, issues like procurement centres to be opened by the FCI/
State Government Agencies (SGAs), arrangement of storage space, evacuation
plan for foodgrains and arrangement of packaging,material are discussed in detail.
Based on the estimates given by the State Food Secretaries, the targets of total
procurement for the Central Pool are worked out in the meeting.

Minimum Support Price

Foodgrains are procured at the Minimum Support Price (MSP) fixed by the
Government.

For KMS 2017-18, the MSP for Common and Grade ‘A’ paddy was fixed at `
1550/- and

1590/- per quintal respectively. The MSP of wheat was fixed at ` 1625/- per
quintal for

the RMS 2017-18, and for RMS 2018-19, it has been fixed at ` 1735/- per quintal.

The Price Support Policy of the Government is directed at providing insurance

to agricultural producers against any sharp fall in farm prices. The minimum
guaranteed prices are fixed to set a floor below which market prices cannot fall.
Till the mid 1970s, Government announced two types of administered prices :
 Minimum Support Prices (MSP)
 Procurement Prices
The MSPs served as the floor prices and were fixed by the Government in the
nature of a long-term guarantee for investment decisions of producers, with the
assurance that prices of their commodities would not be allowed to fall below the
level fixed by the Government, even in the case of a bumper crop. Procurement
prices were the prices of kharif and rabi cereals at which the grain was to be
domestically procured by public agencies (like the FCI) for release through PDS. It
was announced soon after harvest began. Minimum Support Price (MSP) is a form
of market intervention by the Government of India to insure agricultural producers
against any sharp fall in farm prices. The minimum support prices are announced
24
 by the Government of India at the beginning of the sowing season for certain crops
on the basis of the recommendations of the Commission for Agricultural Costs and
Prices (CACP). MSP is price fixed by Government of India to protect the producer
- farmers - against excessive fall in price during bumper production years. The
minimum support prices are a guarantee price for their produce from the
Government. The major objectives are to support the farmers from distress sales
and to procure food grains for public distribution. In case the market price for the
commodity falls below the announced minimum price due to bumper production
and glut in the market, government agencies purchase the entire quantity offered
by the farmers at the announced minimum price

Determination of MSP
In formulating the recommendations in respect of the level of minimum support
prices and other non-price measures, the Commission takes into account, apart
from a comprehensive view of the entire structure of the economy of a particular
commodity or group of commodities, the following factors:

 Cost of production
 Changes in input prices
 Input-output price parity
 Trends in market prices
 Demand and supply
 Inter-crop price parity
 Effect on industrial cost structure
 Effect on cost of living
 Effect on general price level
 International price situation
 Parity between prices paid and prices received by the farmers.
 Effect on issue prices and implications for subsidy

The Commission makes use of both micro-level data and

aggregates at the level of district, state and the country. The
information/data used by the Commission, inter-alia include the
following-
 Cost of cultivation per hectare and structure of costs in various regions of the
country and changes there in;

25
 Cost of production per quintal in various regions of the country and changes
therein;
 Prices of various inputs and changes therein;
 Market prices of products and changes therein;
 Prices of commodities sold by the farmers and of those purchased by them and
changes therein;
 Supply related information - area, yield and production, imports, exports and
domestic availability and stocks with the Government/public agencies or industry;
 Demand related information - total and per capita consumption, trends and
capacity of the processing industry;
 Prices in the international market and changes therein, demand and supply
situation in the world market;
 Prices of the derivatives of the farm products such as sugar, jaggery, jute goods,
edible/non-edible oils and cotton yarn and changes therein;
 Cost of processing of agricultural products and changes therein;
 Cost of marketing - storage, transportation, processing, marketing services,
taxes/fees and margins retained by market functionaries; and
 Macro-economic variables such as general level of prices, consumer price indices
and those reflecting monetary and fiscal factors.

The comparative MSP of wheat and paddy as announced by the

Ministry of Agriculture for crop year 2011-12 to 2017-18 is given
below:-

26
Procurement Plan For Winter/ Summer Paddy In KMS 2016-17

27
Procurement Plan for KMS 2017-18
For the Kharif crop of KMS 2017-18, an estimated target of 375.00 lakh MT for
procurement of rice has been set in consultation with the State Governments after a
Conference of the State Food Secretaries held on 27.07.2017. Government fixes
the period of procurement of paddy in various States and also enforces a discipline
in milling of the procured paddy for completion of milling and handing over of
CMR to SGAs/ FCI. Separate targets are to be fixed for procurement of paddy

28
29
PROCUREMENT OF RICE IN 5 YEARS

Procurement Plan for RMS 2017-18

For wheat crop of RMS 2017-18, an estimated target of 330.00 lakh MT for
procurement was set in consultation with the State Governments after a Conference
of the State Food Secretaries held on 15.02.2017. Government fixes the period of
procurement of wheat in various States in such a manner that the procurement
could start on the onset of harvesting and generally continue for a period of 3-4
30
months in a particular State. Arrangements for opening of sufficient number of
purchase centres, deploying procurement and quality testing staff, timely supply of
packaging materials, mobilisation of required storage space were finalized in the
meeting.

31
 PRO
CUREMENT OF WHEAT IN 5 YEAR

32
Revision of Import Duty on Wheat
The duty of wheat was imposed 10% w.e.f. 28.03.2017 and it has been raised to
20% w.e.f. 08.11.2017 mainly to incentivize the farmers to invest more in wheat
cultivation in forthcoming Rabi Season to protect our food security concerns.

Status of Procurement of Foodgrains

The status of procurement of foodgrains in 2017 - 18 is given below:

(i) In RMS 2017-18 (April 2017 to March 2018), 308.24 Lakh MT of

wheat has been procured for the Central Pool.
(ii) For the KMS 2017-18 (October, 2017- September, 2018),
procurement of paddy/ rice started in October, 2017 and by
31.12.2017, 244.38 lakh MT of paddy in terms of rice has been
procured in various States against the target of 375.00 lakh MT for
Kharif crop of KMS 2017-18.
(iii) The total procurement of paddy in terms of rice in KMS–2016-17,
which has ended on 30th September, 2017 has been 381.06 lakh
MT as reported by FCI against the overall estimated
quantitProcurement of Pulses by FCI 3.35 HLC recommended that
Government of India needs to revisit its MSP policy. Currently,
MSPs are announced for 23 commodities, but effectively price
support operates primarily in wheat and rice and that too in
selected states.
(iv) This y of 380.00 lakh MT for that season.

Procurement of Pulses by FCI

1. HLC recommended that Government of India needs to revisit
its MSP policy. Currently, MSPs are announced for 23 commodities, but
effectively price support operates primarily in wheat and rice and that too in
selected states.
2. This Department agreed for procurement of pulses and oilseeds
through FCI on the pattern of NAFED under the Price Support Scheme of the
Department of Agriculture, Cooperation & Farmers Welfare (DAC&FW). With
the approval of CCEA, the DAC&FW has, vide orders dated 23.06.2015,

33
 decided that FCI should be included as an Additional Central Nodal Agency for
procurement of Pulses and Oilseeds.
3. Accordingly, the Department of Food & Public Distribution has
issued orders allowing FCI to be the Additional Central Nodal Agency for
procurement of pulses and oilseeds and has further required FCI to make
arrangements for procurement of such commodities at MSP with the support of
the State Government Agencies having experience and expertise of
procurement of such commodities.
4. The pattern of arrangements for Price Support Operations are
going to be similar to the modus operandi adopted by NAFED for procurement
of pulses and oilseeds and the required credit etc. should be mobilized under the
guarantee provided to FCI separately by the DAC&FW for that purpose. The
losses incurred with regard to the MSP operations of pulses and oilseeds will be
required to be directly compensated to FCI by the Department of Agriculture &
Cooperation on the pattern of NAFED.
5. For creating the buffer under Price Stabilization Fund (PSF),
FCI procured pulses during KMS 2015-16, RMS 2016-17 & KMS 2016-17. As
per the decision of Department of Consumer Affairs (DoCA), GoI, FCI did not
participate in procurement of pulses during RMS 2017-18 and is also not
participating in KMS 2017-18 Season.

Storage:
Storage function involves all activities in a depot post dumping on the
platform. Storage in a depot is primarily done in a Shed (Godown) which
has a Shed In-charge. Storage process comprises of stacking activity in a
particular shed (as per the 12+8 and 13+9 standard). A gang is allotted at the
weighbridge which carries out the stacking activity under the directions of a

34
 Shed In-charge. The storage function assumes paramount importance in
organization such as Food Corporation of India because of its requirement to
hold huge inventory of foodgrains over a significant period of time.  Storage
plan of FCI is primarily to meet the storage requirement for holding stocks
to meet the requirements of Public Distribution System and Other Welfare
Schemes undertaken by the Government of India. Also, buffer stock is to be
maintained for ensuring food security of the nation. Adequate scientific
storage is pre-requisite to fulfill the policy objectives assigned to the Food
Corporation of India for which FCI has a network of strategically located
storage depots including silos all over India.
Besides having own storage capacity, FCI has hired storage capacities
from Central Warehousing Corporation, State Warehousing Corporations,
State Agencies and Private Parties for short term as well as for guaranteed
period under Private Entrepreneurs Guarantee Scheme.
New Godowns are being constructed by FCI mainly through Private
Participation under Private Entrepreneurs Guarantee Scheme. FCI is also
augmenting and modernizing its storage capacity in the form of silos
through Public Private Partnership.

The diagram depicts the major sub-processes in the Storage

function :-

35
Central Warehousing Corporation (CWC) & Central Railside
Warehouse Company Limited (CRWC)
1. CWC has achieved the turnover of ` 1606.29 crore, during
2016-17 in spite of stiff competition in the market.

36
 2. CWC has paid a dividend of 53.14 crore (142% of Paid up
Capital) for the year 2016-17 to the Govt. of India.
3. Additional storage capacity of 95,050 MT has been created by
Central Warehousing Corporation (CWC) during the year 2016-17 at 15
locations in 10 States.
4. Depot Online System has been implemented in all 156 godowns
of CWC which are used by FCI for storage of foodgrains.
5. Construction of 3000 MT Railside Warehouse Complex (RWC)
at Jogeshwari, Mumbai was taken up by Central Railside.
6. Warehouse Company Limited (CRWC) during the year and the
same was completed and commissioned on 17.05.2017.
7. Construction of 13,800 MT warehouse at Pahleja, Bihar was
completed by CRWC during the year.
8. Railway approval for construction of 20,400 MT warehouse at
Fatuha, Bihar has been obtained and the work has commenced in
November, 2017.
9. An auction portal named e-RashtriyaKisanAgri Mandi (e-
RAKAM) was launched on the 01.08.2017 by CRWC, in association
with MSTC, for the benefit of the Indian Farmers for providing logistics
support for last mile connectivity to the buyers and overall development
of Agriculture sector in the country.

37
 Warehousing Development and Regulatory Authority (WDRA)

1. Government has simplified the process of registration of warehouses with

WDRA by notifying new registration rules, vide GSR 165 (E) dated 23.02.2017
and amendments thereto, vide 1040 (E) dated 22.08.2017. The new rules intend
to increase the number of registered warehouses with WDRA. This would
enhance facility of pledge finance for the farmers through Negotiable
Warehouse Receipts system.
2. Shri Ram Vilas Paswan, Hon’ble Minister of Consumer Affairs, Food & Public
Distribution launched the Electronic Negotiable Warehousing Receipt (eNWR)
System and WDRA Portal on 26.09.2017 to transform the process of
registration of warehouses online and to issue.e-NWR instead of paper-NWR
which will be a more credible financing tool. The eNWR System will be

38
 implemented through two repositories - National E-Repositories Ltd. (NERL)
and CDSL Commodity Repository Limited (CCRL).

PEG Scheme for Construction of Godowns

1. To overcome storage constraints and ensure safe stocking of foodgrains across
the country, the Government is implementing the Private Entrepreneurs
Guarantee (PEG) Scheme for construction of storage godowns in PPP through
private entrepreneurs, Central Warehousing Corporation (CWC) and State
Warehousing Corporations (SWCs). Assessment of additional storage capacities
required under the scheme is based on the overall procurement/consumption and
the storage space already available.
2. Under the PEG scheme, FCI gives a guarantee of 10 years to private investors
and 9 years to CWC/ SWCs/State Agencies. A capacity of 150.99 lakh MT has
been sanctioned for construction of PEG godowns in 21 States. A capacity of
139.92 lakh MT has been completed and a capacity of 7.67 lakh MT is under
construction upto 30.11.2017. State-wise status of PEG scheme upto 31.11.2017
is at Annex-VIII.
3. A capacity of 2.61 lakh MT has been completed during the year from
31.03.2017 upto 30.11.2017.

To take care of increasing levels of production/procurement of foodgrains

and to reduce the dependence on Cover And Plinth (CAP) type of open
storage for foodgrains, the Department is implementing a scheme, namely
Private Entrepreneurs Guarantee (PEG) Scheme, for augmenting the storage

39
 capacity of FCI in PPP mode. The scheme was started for non-DCP states in
2008 and then extended to DCP states. Construction of godowns is done by
private investors or CWC/SWCs without any investment by the
Government. Return on investment is earned by the parties through rent, as
FCI hires the godowns for a guarantee period of 10 years for private
parties. For Public Sector agencies it is 9 years.

The scheme is in operation in 20 states. As on 30.04.2017, capacity of 150.49 lakh

MT has been sanctioned for construction and 137.40 lakh MT has been
completed. Further 8.37 LMT is under various stages of construction

SILOS – Scientific Storage of Food Grains

Ministry of Consumer Affairs, Food and Public Distribution has approved 100
LMT capacity for construction of steel Silos.

1. Steel Silo storage with bulk handling facility is highly mechanized and
modernized way of storing of foodgrains in bulk. It ensures better
preservation of foodgrains and enhances its shelf life. If foodgrains are
stored in Silos and transported in bulk, losses due to theft, pilferage and
transportation would be negligible compared to foodgrains storage in bags
in conventional warehouses. Further, since land availability in existing FCI
godowns is scarce, it would be prudent to shift to storage of foodgrains in
Silos as it requires approximately 1/3rd land as compared to conventional
storage warehouses.

2. Moreover, Silos can be operated round the clock which would bring in
flexibility and would improve overall efficiency. As such, construction of
Silos and utilization of Silos for storing and transportation of foodgrains in
bulk would be beneficial to the nation as a whole besides also creating an
efficient Food Supply Chain Management System.

3. Accordingly, FCI has planned to modernize its storage facilities by

construction of modern steel Silos on a PPP mode. FCI had constructed

40
 steel silos of 5.50 lakh MT capacity in 2008 in Public Private Partnership
(PPP) mode,in two circuits as per details given below:

4. In pursuance to recommendations of High Level Committee headed by Shri

Shanta Kumar, Hon’ble MP, received in January, 2015, this Department has
approved a road map/action plan prepared by FCI to augment Silo capacity
in the country to the tune of100 lakh MT in a phased manner as follows:

5. Construction will be done in PPP mode through FCI, State Governments

and other agencies like CWC. Total 31.50 LMT is planned to be constructed
by Government of India through FCI.

41
6. The progress of construction of silos, as on 30.11.2017, is given below

7. FCI has issued tenders for further 10.00 lakh MT. FCI has also finalized
locations for floating tenders of total capacity of 1.00 lakh MT in West
Bengal (1 location).
8. FCI has awarded contract for conduct of a study by professional experts to
M/s PWC on 24.07.2017 for assessment of storage requirement, technology
for storage of pulses, etc. 5.14 CWC has initiated action for 50,000 MT silos
at Nabha (Punjab).
9. The latest re-tender has been opened on 07.11.2017. 5.15 High Level
Committee (HLC) for silos has identified locations for issue of tenders by
State Government Agencies of Punjab (1 location, 1.00 LMT) and Haryana
(7 locations, 4.50 LMT).

42
CentralSector (Plan) Scheme for Construction of Storage Godowns
1. The Department is implementing a Central Sector (Plan) Scheme for
construction of godowns with focus on augmenting capacity in the North
Eastern Region alongwith few other States.
2. In addition, the Department has been requesting the State Governments
to create intermediate storage capacities at Block/Taluka level to store
foodgrains collected from FCI depots, for further distribution to fair price shops.
This is necessary to improve the supply chain logistics for TPDS.
3. While construction of intermediate godowns is the responsibility of the
State Governments, the Department has been providing plan funds to
Governments of the NE States including Sikkim for this purpose, considering
their difficult geographical conditions.
4. During 12th Five Year Plan, a capacity of 1,17,680 MT in North Eastern
(NE) States and 20,000 MT in other than NE States has been completed by FCI.
5. Further, a capacity of 46,495 MT has been created by State Governments.
The scheme would be continued for next three years, i.e. 2017-18 to 2019-20.
6. There is a plan to create a capacity of 2,52,330 MT with a financial
outlay of ` 455.72 crore, out of which 2,10,440 MT capacity (` 379.71 crore) is
to be created by FCI and 41,890 MT capacity (` 76.01) by State Governments of
NER includ As on 30.11.2017, a capacity of 4,590 MT has been completed by
FCI and 4500 MT by State Governments in 2017-18.
7. An amount of ` 19.75 crore has been released to State Governments and
` 12.17 crore to FCI till 30.11.2017.In addition, hiring of storage capacities is
done by FCI wherever required. The storage capacity available with FCI as on
30th June and the percentage utilization during last five years.

Online Depot Management System (ODMS)

43
FCI has implemented this system to automate all the operations at the depot level
and eliminate usage of manual registers by capturing data online at source and on a
real time basis. 5.23 Depot Online System (DOS) is operational at all 526
functional depots of FCI at present. DOS has also been implemented at all 156
depots of CWC which have been hired by FCI for storage of foodgrains.

Installation of CCTV Cameras

CCTV Cameras have been installed at 426 depots of FCI, for effective security
surveillance to minimize theft, pilferage etc. In addition, Central Warehousing
Corporation (CWC) has also installed CCTV Cameras in 50 warehouses.

Quality ControlQC is one of the major activities in a depot. It initiates from

inflow of food-grains and ends at outflow of food grains from Depot. Manager QC
is responsible for maintaining quality of food grains by ensuring routine
(fortnightly) inspections and conducting disinfestations whenever required.
Manager (QC) is also responsible for assigning priorities to food-grain bags during
outflow from a depot.

The Quality Control (QC) wing of FCI is entrusted with enormous task of
procurement & preservation of foodgrains.

The foodgrains are procured as per laid down

specifications of Govt. of India and inspected regularly during storage to monitor
the quality. Representative samples of the stocks are drawn for physical analysis
to ensure whether the quality standard meets the parameters of laid down
Specifications of Government of India. The method of analysis for rice samples is
followed as given in Bureau of Indian Standard "Method of analysis for

44
Foodgrains" No's IS: 4333 (Part-1):1996 and IS: 4333 (Part- II): 2002
"Terminology for Foodgrains" IS: 2813-1995 as amended from time to time. The
District and Depot laboratories undertake physical analysis of foodgrains of
procured Rice as per Uniform Specification issued by Govt. of India. Analysis of
food grains involves physical as well as chemical parameters. Currently, physical
analysis is done manually. The senior QC Officers undertake frequent visits to the
procurement & storage points to inspect the quality of foodgrain stocks and
further sensitize the QC staff on the spot toensure procurement of foodgrains
conforming to specifications and its maintenance during storage at all levels.
Appropriate action is also initiated against defaulters, if any, in order to tighten the
supervisory arrangement and fix responsibilities on all found responsible for
procurement of stocks beyond laid down parameters. Long term/ short term
trainings are held on regular basis for QC staff on procurement and preservation
of foodgrain management.

Periodical preventive and curative treatments are given to the

stocks to ensure the health of the grains. Preventive measures are
also undertaken to control rodents and birds. 10.22 The foodgrain
stocks strictly conforming to laiddown specifications of Govt. of
India are issued under PDS to various State Governments by
adopting joint sampling system scrupulously.

FCI has increased its storage facilities by a third in six years to 81.48 million
tonnes. Central Warehousing Corporation, State Warehousing Corporation and
private investors have additionally built 13.34 million tonnes of storage under the
private entrepreneurs guarantee, of which FCI has taken over 12.74 million tonnes.
Private investors under the aegis of FCI have also built 0.5 million tonnes of silos.

45
 “There will be no storage problems in traditional markets. There could be
some requirements in non-traditional markets,” said Sanjay Kaul, managing
director, National Collateral Management Services.
The agriculture ministry forecasts the country’s rice output this year at 108.86
million tonnes, up from 104.41 million tonnes a year ago, and wheat output at
96.64 million tonnes, up from 92.29 million tonnes.

Steps taken for Safe & Scientific Storage of Foodgrains

In order to prevent wastage of foodgrains during supply chain, there is an elaborate
mechanism to ensure procurement of good quality foodgrains, its safe storage,
transportation and distribution. Foodgrains for central pool are procured
conforming to the uniform specifications formulated by the Government. Procured
foodgrains are to be stored in scientific storage system. During storage, prescribed
code of practices are to be followed to avoid any damage/wastage. There is a
regular monitoring mechanism under which inspections at all levels are carried out
to ensure safe preservations of foodgrains in Food Corporation of India (FCI). To
prevent wastage of foodgrain while in transit by rail/road, FCI takes necessary
measures like loading of foodgrain in fit/cleaned railway wagons, usages of
tarpaulins while road movement to avoid any kind of pilferage and contamination
of foodgrain. Only covered rail wagons are to be used for movement of foodgrains.
This information was given by the Minister of Consumer Affairs, Food and Public
Distribution, Prof.K.V.Thomas in a written reply in Rajya Sabha today.

He said that a number of steps are mandated to be followed by F.C.I. and State
Government agencies for proper upkeep and quality to check damages to central
pool stocks of foodgrains which include followiongs

• All godowns are to be constructed as per specifications. 

• Foodgrains are to be stored by adopting proper scientific code of storage

practices. 

• Adequate dunnage materials such as wooden crates, bamboo mats, polythene

sheets are to be used to check migration of moisture from the floor to the
foodgrains. 

• Fumigation covers, nylon ropes, nets and insecticides for control of stored grain
insect pests are to be provided in all the godowns. 

46
• Prophylactic (spraying of insecticides) and curative treatments (fumigation) are to
be carried out regularly and timely in godowns for the control of stored grain insect
pests. 

• Effective rat control measures, both in covered godowns as well as in CAP

storage are to be used. 

State Warehousing Corporations

CWC has 19 associates, the State Warehousing Corporations (SWCs). The total
investment of the Central Warehousing Corporation, which is 50% shareholder in
the equity capital of the SWCs, as on 30.11.2017 was ` 61.79 crore. As on
30.11.2017 (Provisional), the SWCs operated 1764 warehouses with a total
capacity of 271.82 lakh MT. The SWCs have constructed additional capacity of
6.40 lakh MT during 2016-17.

DISTRIBUTION
In order to achieve the food security of the country, the Sales Division looks after
one of the most important operation i.e. distribution of foodgrains under
TPDS/NFSA & Other Welfare Schemes.

Government of India fulfills the objectives of food security through the Public
Distribution System. Public Distribution System strives to meet the twin objectives
of price support to the farmers for their product and supply of foodgrains at
affordable prices. It is against the stocks procured under price support, Government
releases a certain quantity of foodgrains in each State under the Public Distribution
System. This mission of the Government of India is translated into reality by the
FCI.  In order to implement the food policy of Government, FCI has to fulfil
certain objectives which are as follows:

i) To ensure and equitable distribution of available foodgrains at reasonable prices

to the vulnerable sections of  society throughout the year;

ii) To maintain stability in foodgrains prices throughout  the country during the
year;

47
iii) To maintain an adequate  buffer stock of foodgrains to deal with fluctuations in
production and to meet  unforeseen exigencies and natural calamities.

Functions

The functions of Sales Division are as follows:

1. Management of allocation and offtake of wheat, rice, and coarse grains

under different schemes of Ministry of CAF&PD at Central Issue Price
which are as under:-
(i) TPDS (APL, BPL, AAY, NFSA & Other than NFSA) and Special
additional allocations for TPDS.
(ii) Other Welfare Schemes (OWS) viz.  Mid Day Meal, Annapurna,
SABLA, Nutrition Programme and Welfare Institutions & Hostels.
(iii) Defence/ Para-Military Forces (CRPF/BSF/ITBP).
(iv) Open Market Sales Scheme (Domestic).
2. Monitoring of Stock position of foodgrains against the allotment to ensure
the availability of sufficient stocks in every state.
3. Disposal of issuable old stocks of foodgrains through open tender.
4. Identification & declaration of Base Depot in consultation with the State
Governments..  Reimbursement of Road Transportation Charges(RTC) to
State/UT Governments. where stocks are lifted from other depots instead of
base depot.
5. Policy matter related to reimbursement of Hill Transport Subsidy (HTS) to
the entitled States/UTs being cost of transportation of foodgrains from base
depots to Principal Distribution Centres (PDCs) on actual basis.
6. Issues relating to National Food Security Act (NFSA) and fixation of
Foodgrain Stocking Norms for Central Pool.
7. Release of wheat at pre-determined prices in the open market from time to
time to enhance the supply of wheat especially during the lean season to
moderate the open market prices.

SCHEMES
1. TPDS
2. MID DAY MEAL
48
 3. ANNAPUMA
4. WELFARE INSTITUTE SCHEMES
5. SC/ST/OBC HOSTELS
6. WHEAT BASDED NUTRITION PROGRAM
7. RAJIV GANDHI PROGRAMME FOR EMPOWERMENT OF
ADOLESCENT
8. DEFEFENC/PARA MILITARY FORCES.
9. ADDITIONAL ALLOCATIONS

Implementation of National Food Security Act (NFSA), 2013

The Act is being implemented in all the States/ UTs, and 80.72 crore persons are
being covered for receiving highly subsidized foodgrains at ` 1/2/3 per kg. for
coarse grains / wheat / rice respectively, out of total intented coverage of 81.34
crore persons.

In Chandigarh, Puducherry and urban areas of Dadra & Nagar Haveli, the Act is
being implemented in the cash transfer mode, under which food subsidy is
credited directly into the bank accounts of beneficiaries, who then have the choice
to buy foodgrains from the open market. For the month of December, 2017, `
12.91 crore was transferred as food subsidy for 9.24 lakh persons covered under
the cash transfer of food subsidy scheme.

The prices of foodgrains specified under NFSA – ` 3 per kg for rice, ` 2 per kg for
wheat and ` 1 per kg for coarse grains – which were valid upto July, 2016, have
been continued uptoJune, 2018.

During the Financial Year 2017-18 (upto 31.12.2017), ` 3072.72 crore has been
released to State Governments as Central assistance to meet the expenditure
incurred on intraState movement of foodgrains and fair price shop dealers’
margins. Such an arrangement has been made for the first time under NFSA.

Under erstwhile TPDS, State Governments were required to either meet this
expenditure on their own or pass it on to beneficiaries (except AAY
beneficiaries).To identify and weed-out duplicate/ineligible beneficiaries, and to
enable rightful targeting of food subsidies, seeding of Aadhaar numbers of
beneficiaries with their Ration Cards is being done by States and UTs. Presently,
81.75% of all ration cards have been seeded.

49
Central Issue Price is contributed by the beneficiary. This model enables
continued support to the procurement exercise from farmers at MSP, while dis-
incentivising any leakage of food grains from PDS.

Facility enabling PDS beneficiaries to lift their entitled foodgrains from any fair
price shop in the State where ePoS device has been installed has been started in
states of Andhra Pradesh, Haryana, Jharkhand, Karnataka, Chhattisgarh (750
FPSs), and Telangana (2273 FPSs).

A new Central Sector Scheme has been approved to be implemented during FY

2018-19 and FY 2019-20 for establishing Public Distribution System Network
(PDSN) to implement national level portability, central data repository and central
monitoring system of PDS operations.

Annavitran Portal (www.annavitran.nic.in) has been implemented to display

electronic transactions made through ePoS devices for distribution of subsidized
foodgrains to beneficiaries.

TPDS
APL(average poverty line), bpl(below poverty line),aay(antodayaann yojana)
 only for ration card holder
 monthly allotment

RATES
APL/OTHER THAN NFSA-RICE    : 830/-
BPL-WHEAT : 415/-
BPL-RICE    : 565/-
AAY-WHEAT : 200/-
AAY-RICE    : 300/-
NFSA-WHEAT: 200/-

Major Reforms in TPDS

As an outcome of digitization of Ration Card/ beneficiary records, de-duplication
due to Aadhaar seeding, transfer/migration/deaths, change in economic status of
beneficiaries, and during the run-up to and implementation of NFSA, a total of
2.75 crore ration cards have beendeleted/cancelled by State/UT Governments
during the years 2013 to 2017 (upto November, 2017). Based on this the
Government has been able to achieve an estimated ‘Rightful Targeting of Food
Subsidies’ of about ` 17,500 Crore per annum.
50
To identify and weed-out duplicate/ineligible beneficiaries, and to enable rightful
targeting of food subsidies, seeding of Aadhaar numbers of beneficiaries with
their Ration Cards is being done by States and UTs. Presently, 81.75% of all
ration cards have been seeded. Ø As part of the scheme, electronic Point of
Sale (ePoS) devices are being installed at Fair Price Shops (FPSs) for distribution
of foodgrains through authentication and electronic recordkeeping of the sale
transactions.

A pilot scheme on DBT (In-cash & In-kind) on the pattern of “PAHAL” has been
launched in Nagri Block of Ranchi District, Jharkhand w.e.f. October, 2017.
Under this scheme, the subsidy amount (economic cost, less the central issue
price) is directly transferred into the bank account of the eligible NFSA
beneficiaries in advance in the beginning of the month.A new Central Sector
Scheme has been approved to be implemented during FY 2018-19 and FY 2019-
20 for establishing Public Distribution System Network (PDSN) to implement
national level portability, central data repository and central monitoring system of
PDS operations.

Annavitran Portal (www.annavitran.nic.in) has been implemented to display

electronic transactions made through ePoS devices for distribution of subsidized
foodgrains to beneficiaries. This portal also shows all India picture of Aadhaar
authentication of beneficiaries besides allocated and distributed quantity of
foodgrains up to district level.

Other Welfare Schemes (OWS)

51
Mid-Day Meal Scheme
The Mid-Day Meal Scheme was launched on 15.08.1995 by the Ministry of
Human Resource Development with a view to enhance enrollment, retention,
attendance and simultaneously improving nutritional levels among students in
primary schools, initially in 2408 blocks in country. By the year 1997-98 the
scheme was introduced in all the blocks of the country. The Scheme presently
covers students of Class I-VIII of Government and Government aided schools,
Education Guarantee Scheme/Alternative and Innovative Education Centres
(EGS/AIE).

The Department makes annual allocation of foodgrains under the Scheme to

Department of School Education & Literacy, Ministry of Human Resource
Development. Sub-allocation of foodgrains to States/UTs is made by Department
of School Education & Literacy. W.e.f. 01.04.2016, allocation of foodgrain under
MDM is made at NFSA rates to the Department of School Education & Literacy.

Annual allocation/offtake of foodgrains under the scheme during the last three
years & current year is as under:

Wheat Based Nutrition Programme (WBNP)

This Scheme is implemented by the Ministry of Women & Child Developme
Food & Public Distribution. With effect from 1-April-2016, allocation of
foodgrain under WBNP is made at NFSA rates to the Ministry of Women & Child
Development. The foodgrains allotted under this Scheme are utilized by the
States/UTs under the Umbrella Integrated Child Development Services Scheme
(ICDS) for providing nutritious/ energy food to children below 6 years of age and
expectant/lactating women.

52
Annual allocation/offtake of foodgrains under the scheme during the last three
years & current year is as under

Scheme For Allocation of Foodgrains to Welfare Institutions and

Hostels
With a view to meet the requirement of Welfare Institutions viz. Charitable
Institutions such as beggar homes, nari-niketans and other similar welfare
institutions not covered under TPDS or under any other Welfare Scheme, an
additional allocation of foodgrains (rice and wheat) not exceeding 5% of the BPL
allocation was made to States/UTs by the Department of Food and Public
Distribution based on the request received from the States/UTs.

SC/ST/OBC Hostel scheme was introduced in October, 1994. The residents of the
hostels having 2/3rd students belonging to SC/ST/OBC category are eligible to get
15 kg foodgrains per residentper month. Allocation of foodgrains under the
scheme was made by the Department based on the requests received from the
States/UTs.

Allocation under the above schemes put together is subject to a maximum ceiling
of 5% of the erstwhile BPL allocation of respective States/ UTs. With effect from
01.09.2017 both the above schemes have been clubbed together into a single
scheme viz.

Welfare Institutions and Hostels Scheme, and the States/UTs have been requested
to send their requirement of foodgrain for 2nd half of 2017-18 as per the revised
scheme. The allocation/offtake of foodgrains under the above two schemes
(Welfare Institutions and SC/ ST/OBC Hostels) during the last three years &
current year is as under:
53
Annapurna Scheme
The Ministry of Rural Development (RD) launched the Annapurna Scheme in
2000-2001. Department of Food & Public Distribution allocates foodgrains as per
the requirement projected by MoRD.

Indigent senior citizens of 65 years of age or above who are not getting pension
under the National Old Age Pension Scheme (NOAPS) are provided 10 kgs. of
foodgrains per person per month free of cost under the scheme.

The Central Issue Price for the scheme is BPL rates.

Annual allocation/offtake of foodgrains under the scheme during the last three
years and current year is as follows:-

Scheme for Adolescent Girls [Earlier Named as Rajiv Gandhi

Scheme for Empowerment of Adolescent Girls
(RGSEAG)–‘SABLA’]

54
The Ministry of Women & Child Development administers the Scheme for
Adolescent Girls. The SABLA Scheme was launched on 19.11.2010 by merging
two schemes namely Nutrition Programme for Adolescent Girls (NPAG) and
Kishori Shakti Yojana (KSY) into a single scheme to be implemented in 200
selected districts across the country. The Scheme aims at empowering adolescent
girls of 11-18 years by improvement of their nutritional and health status and
upgrading various skills like home skills, life skills and vocational skills. It also
aims at equipping the girls on family welfare, health hygiene etc. and information
and guidance on existing public services along with aiming to mainstream out of
school girls into formal or non-formal education. The requirement of food grains
under the scheme for nutrition is @ 100 grams of grains per beneficiary per day
for 300 days in a year.

Allocation of Foodgrains Under TPDS and other Welfare Schemes

With a view to make receipt of foodgrains under TPDS a legal right, Government
of India enacted NFSA, 2013 which came into force w.e.f. 05.07.2013. The Act
provides for coverage of upto 75% of the rural population and upto 50% of the
urban population for receiving subsidized foodgrains under TPDS, thus covering
about two-third of the population. The eligible persons identified by the
States/UTs are entitled to receive 5 kgs of foodgrains per person per month at
subsidized prices of ` 3/2/1 per kg for rice/ wheat/nutri-grains (Coarsegrain)

55
 COMPANY PROFILE
FCI : Food Corporation of India
The Food Corporation of India was setup under the Food Corporation's Act 1964,
in order to fulfill following objectives of the Food Policy:

 Effective price support operations for safeguarding the interests of the farmers.

 Distribution of foodgrains throughout the country for public distribution system.

 Maintaining satisfactory level of operational and buffer stocks of foodgrains to

ensure National Food Security

Since its inception, FCI has played a significant role in India's success in
transforming the crisis management oriented food security into a stable security
system.The Food Corporation of India (FCI), a public sector enterprise setup on
14.01.1965, under the Food Corporations Act, 1964, is the main agency
responsible for execution of the food policies of Central Government. Functions of
the FCI primarily relate to the procurement, storage, movement, distribution and
sale of food grains on behalf of the Central Government. It is one of the largest
corporations in India and probably the largest supply chain management in Asia
(Second in world). It operates through 05 Zonal offices and 24 Regional offices.
Each year, the Food Corporation of India purchases roughly 15 to 20 per cent of
India's wheat output and 12 to 15 per cent of its rice output. The purchases are
made from the farmers at the rates declared by the Govt. of India. This rate is
called as MSP (Minimum Support Price). There is no limit for procurement in
terms of volume, any quantity can be procured by FCI (Food Corporation of India)
provided the stock satisfies FAQ (Fair Average Quality) specifications with respect
to FCI.

56
57
Type Government-owned corporation

Industry PSU

Founded 1965

Founder Govt of India

Headquarters New Delhi, India

Number of locations Every District in India

Area served All India

Key people Shri YogendraTripathi (wef 30 July 2015 F/N) (I.A.S), chairman & MD

Products Mainly Wheat & Rice

Services Govt Policy Execution

Owner Govt of India

Number of employees Sanctioned:- 42038 In position:- 23221 (as on 31 March 2017)

Website fci.gov.in

58
 HISTORY

Pre-Independence

During the World War II India faced acute food shortages and to meet the
exigencies a separate Food Department was established on 1st December 1942
under the Commerce Member of the Governor General’s Council. Following is the
extract of note made by the first Secretary Food, Benjamin George Holdsworth,
CIE, ICS, taken from the Home Department File No. 388/42-Public, wherein the
proposal to issue a formal Resolution of constitution of the new Department of
Food by the Home department is dealt.

Post-Independence

The Food Department was re-designated as Ministry of Food on 29 th August 1947.

As per available records, the Directorate of Sugar and Vanaspati was part of Food
Ministry in 1947. On 1st February 1951 the Ministry of Agriculture was combined
with the Ministry of Food to constitute the Ministry of Food and Agriculture, for
greater administrative efficiency and economy. Over time as the work expanded
significantly, two separate ministries, namely Ministry of Food and Ministry of
Agriculture were formed in October 1956 but they were again merged on 17 th April
1957 as Ministry of Food and Agriculture. On 30 th December 1958, the work
related to the Central and State Warehousing Corporations was transferred to the
Department of Food, in the Ministry of Food and Agriculture.
In 1960 the Ministry was made into two departments, namely the Department of
Food and Department of Agriculture. Department of Food was given the
responsibility of procurement of food grains for civil and military requirements,
distribution of imported food grains to States, co-ordination, planning and
guidance of national food policy and regulation of import and export of food
grains. Directorate of Sugar and Vanaspati remained with Department of Food.
Department had various schemes for development of sugar and vanaspati
industries.

59
 Vision

Ensuring Food Security for citizens of the country. To play a significant role in India’s success in
transforming the crisis management oriented food security into a stable security system to ensure
availability, accessibility and affordability of food grains to all people at all times so that no one,
nowhere and at no time should go hungry.

Mission

 Efficient procurement at Minimum Support Price (MSP), storage and distribution

of food grains.
 Ensuring availability of food grains and sugar through appropriate policy
instrument; including maintenance of buffer stocks of food grains.
 Making food grains accessible at reasonable prices, especially to the weak errand
vulnerable sections of the society under PDS.

Ensuring food security of nation by maintaining satisfactory level of operational

buffer stocks of food grains. Distribution of food grains throughout the country for
Public Distribution System. Effective Price Support Operations for safeguarding
the interest of farmers.

Objectives
1. To implement the National Food Security Act, 2013, throughout the country.

2. To undertake price support operation through efficient procurement of wheat,

paddy/rice and coarse grains.

3. To strengthen the Targeted Public Distribution System.

4. Development/Promotion of Sugar industry.

5. Development of Warehousing Sector.

6. Effective price support operations for safeguarding the interests of the farmers.
7. Distribution of food grains throughout the country for public distribution
system.
8. Maintaining satisfactory level of operational and buffer stocks of food grains
to ensure National Food Security.
9. To provide farmers remunerative prices.To make food grains available at
reasonable prices, particularly to vulnerable section of the society.
10.To maintain buffer stocks as measure of Food Security.

60
 ORGANIZATIONAL STRUCTURE

Food Corporation of India operates through its Depot headed by Manager(Depot).

Every district has few depots to cater to the requirement of the district's rural
population. The depot reports to District Office, headed by an Assistant General
Manager, designated as Area Manager.
Assistant General Manager (Quality Control) is also posted who is looking after
the QC work. Under Area Manager control, there are Managers to deal with each
and every section viz., Depot, Sales, Contracts, Procurement, SL-TL, Movement,
Establishment, Quality Control (QC), Operational accounts etc., who consolidate
the field level operations and through the area managers' authorization, they
transmit the necessary information and periodical statements to Regional Offices
of their respective regions. Under Managers are Assistant Grades Level -1, Level -
2 and Level - 3 who help managers in day-to-day operations of the organization.
The district office reports to regional offices which are headed by a General
Manager, who is in most of the cases from Indian Revenue Service, Indian
Administrative Service /All India Services under deputation. Under his control
Deputy General Managers (DGM) who are FCI's officers co-ordinate with daily
operations through the Assistant General Managers who were posted in various
sections to oversee the functions of district offices units of their particular section.
All these officers appraise the general manager periodically on various issues
pertaining to district offices of that particular region.

61
FCI has been divided into 5 zones viz. North, South, East, West & North-East with
a Zonal Office in each zone. Each zone is further divided into regions with a
regional office in one region. All the Regional Offices are under the control of
Zonal Offices which are headed by an Executive Director, who in most of the cases
is from Indian Administrative Service or Indian Revenue Service under deputation.
Under his control three or more than three General Managers co-ordinate with all
Regional Offices of their particular zone through subordinate officers like Deputy
General Managers and Assistant General Managers dealing with their allotted
operational sections in their zone.
All the Zonal Offices are under the control of Headquarters, located at New Delhi.

The role of FCI in India, its proposed and needed reforms

The role of Food Corporation of India is to maintain sufficient buffer stock in the
country and price stabilisation .

FCI purchases food grains mainly from surplus states such as Punjab, Haryana and
supplies them to deficit states. For example wheat is transported from Haryana,
Punjab to Goa.

62
A minimum support price is fixed by the government of India on which the
purchase of food grains is done, but if a farmer gets more than MSP he is free to
sell it wherever he wants.

The Purchased stock is maintained in godowns aka depots by Quality control staff
of FCI, under which fumigation and other procedures are carefully applied.

Ministry of consumer affairs and Public distribution allocates a particular amount

of food grains to Department of civil supplies, Department of education, Army
supply corps. Under which they lift their allocated stock in time bound manner.

There is also a scheme called OMSS or open market sale scheme where private
parties purchase food grains from FCI, but this sale is done only when stock is
surplus and may deteriorate if not processed or consumed.

The supply of food grains for Mid day meal scheme ( Primary and upper Primary),
APL ( Above poverty line),( Below poverty Line) BPL and other schemes
( SABLA, WBNP) is done by FCI.

The Supply of Food grains to army is also done by FCI.

And as far as reforms are concerned.

Rail Transit Loss, and storage losses are the two kinds of losses suffered by FCI.

Transit loss is result of poor handling by handling loaders (such as use of hooks),
while loading and unloading and use of damaged wagons by Indian Railways for
transporting food grains, Sometimes loss in the moisture of food grains while
transporting also causes loss in tonnes which is later written off.

Storage loss is mainly because of poor condition of storage depots because of

which a considerable amount is consumed by rodents and pigeons, which varies
from depot to depot.

To counter the Rail Transit loss freight Container based storage as well as transport
system is being brought into force by FCI.

And a major breakthrough was implementation of Depot online system which will
be immensely beneficial in curbing the various malpractices across India.

DIRECTORY OF OFFICERS
SCHEMES
63
 Implementation of National Food Security Act (NFSA), 2013
1. The Act is being implemented in all the States/ UTs, and 80.72 crore persons are
being covered for receiving highly subsidized foodgrains at ` 1/2/3 per kg.
forcoarse grains / wheat / rice respectively, out of total intented coverage of 81.34
crore persons.
2. In Chandigarh, Puducherry and urban areas of Dadra & Nagar Haveli, the Act is
being implemented in the cash transfer mode, under which food subsidy is credited
directly into the bank accounts of beneficiaries, who then have the choice to buy
foodgrains from the open market. For the month of December, 2017, ` 12.91 crore
was transferred as food subsidy for 9.24 lakh persons covered under the cash
transfer of food subsidy scheme.
3. The prices of foodgrains specified under NFSA –` 3 per kg for rice,`2 per kg for
wheat and `1 per kg for coarse grains – which were valid upto July, 2016, have
been continued upto June, 2018.
4. During the Financial Year 2017-18 (upto 31.12.2017), ` 3072.72 crore has been
released to State Governments as Central assistance to meet the expenditure
incurred on intraState movement of foodgrains and fair price shop dealers’
margins. Such an arrangement has been made for the first time under NFSA.
Under erstwhile TPDS, State Governments were required to either meet this
expenditure on their own or pass it on to beneficiaries (except AAY beneficiaries).
Major Reforms in TPDS.
5. As an outcome of digitization of Ration Card/ beneficiary records, de-duplication
due to Aadhaar seeding, transfer/migration/deaths, change in economic status of
beneficiaries, and during the run-up to and implementation of NFSA, a total of
2.75 crore ration cards have been deleted/cancelled by State/UT Governments

64
 during the years 2013 to 2017 (upto November, 2017). Based on this the
Government has been able to achieve an estimated ‘Rightful Targeting of Food
Subsidies’ of about ` 17,500 Crore per annum.
6. To modernize and to bring about transparency in the TPDS, the Department is
implementing scheme on End-to-end Computerization of TPDS Operations at a
total cost of 884 Crore on cost-sharing basis with the States/UTs. The Scheme
provides for digitization of ration cards & beneficiary records, computerization of
supply chain management, setting up of transparency portals and grievance
redressal mechanisms.
7. Key achievements under the scheme are as follows:

Schematic Activity Achievement:-

1.Digitization of ration cards / beneficiaries data Completed in all States/ UTs.

2. Online allocation of food grainsStarted in 30 States/UTs.

3. Computerization of Supply Chain ManagementCompleted in 20 States/ UTs,
and the work is in progress in the remaining States/UTs.
4. Transparency portals Set up in all States/UTs 5 Grievance redressal facilities
Either or both tollfree helplines/Online registration facilityis available in all
States/UTs.

Supporting the Farmer

1. During KMS 2016-17, a record quantity of 381.07 Lakh MT paddy (in terms of
rice) was procured. During RMS 2017-18, a quantity of 308.24 lakh.
2. MT of wheat was procured which is highest in last five years.
3. Enhancing procurement in Eastern India: (a) State-wise 5-year Action Plans have
been drawn up by FCI for Uttar Pradesh (with focus on Eastern U.P.), Bihar,
Jharkhand, West Bengal & Assam. Procurement in Chhattisgarh and Odisha is
already robust. Attempt is to increase procurement of rice from these States and to
reach out to all farmers in various paddy growing districts of these States. (b) FCI
has opened 266 procurement centres in comparison to only 234 in previous season.
Besides Government Agencies, FCI in consultation with States has engaged private
parties to expand procurement operations in hitherto poorly covered clusters in
Eastern U.P., Jharkhand and West Bengal.
4. A total of 28489 procurement centres have been opened in this KMS 2016-17 in
these States by FCI, State Govt. Agencies and private parties.

65
5. FCI has started procurement of pulses from farmers at market price under Price
Stabilisation Fund operation. In KMS 2016-17, FCI has procured 64737.25 MT of
Moong, 18234.68 MT of Urad and 175299.03 MT of Tur.
6. The import duty on wheat was imposed at 10% w.e.f. 28.03.2017 and it has been
raised to 20% w.e.f. 08.11.2017 mainly to incentivize the farmers to invest more in
wheat cultivation inforthcoming Rabi Season to protect our food security
concerns.

Improving Foodgrain Management

1. A High Level Expert Committee under the Chairmanship of Shri Shanta Kumar,
MP, was constituted to make recommendations on re-structuring of FCI.
2. Based on the recommendations, several measures have been initiated to improve
the functioning of FCI and to bring in cost efficiency in its operations.
3. To automate operations at the depot level, and check leakage “Depot Online
System” (DOS) has been implemented to carry out all activities in the godowns in
on-line mode. This system is operational at all 526 functional depots of FCI. DOS
has also been implemented at all 156 depots of CWC which have been hired by
FCI for storage of foodgrains.
4. FCI has developed Online Procurement Management System (OPMS) which is
being used for procurement in the KMS 2016-17. 15 major procuring States are
now using OPMS for the MSP operations. 4 other States have partially
implemented OPMS.
5. Besides, 15 States/UTs which are already under Decentralized Procurement (DCP),
Rajasthan (Wheat in 9 Districts) and Jharkhand (5 Districts for paddy) have
partially adopted DCP System.
6. Sufficient food grains are available in Central Pool Stocks of FCI. Stocks as on
01.12.2017 are 347.91 lakh MT, comprising 216.65 lakh MT wheat and 131.26
lakh MT rice. Under Open Market Sale Scheme (Domestic), 7.41 lakh MT of
wheat and 3.01 lakh MT of rice have been sold by FCI during 2017-18 (till 31st
December, 2017).
7. The new guidelines of usage charges for packaging of procured paddy from KMS
2017-18 onwards has been implemented. It is estimated that the said policy could
result in savings of appprox 600 crores every year to Government of India
exchequer.
8. Movement of food grains is undertaken in order to evacuate stocks from surplus
regions, to meet the NFSA/TPDS/OWS requirements of deficit regions and also to
create buffer stocks in deficit regions. About 40 million tonnes of food grains are
transported by FCI across the country in a year. Movement of food grain is

66
 undertaken by rail, road and riverine systems, singly or in combination. More than
85% of the movement of stocks is undertaken by rail (covering an average lead of
1500 KMs). Some quantity is also moved by ocean vessels to Lakshadweep and
Andaman & Nicobar Islands.
9. FCI is also undertaking multi-modal transportation of rice involving coastal
shipping and road movement from designated depots of Andhra Pradesh to
designated depots in Kerala. The operation started in March, 2014 and upto March,
2017, 1,43,123.98 MT of foodgrains has been transferred. Ø As a part of HLC
recommendation, FCI made a trial movement of containerized movement of
foodgrains through CONCOR from Chhattisgarh (Raipur) to Maharashtra (Turbhe)
in Aug'16 and found it economical in comparison to conventional rakes. In 2016-
17, 13 such containerized movement was undertaken which led to freight savings
of around ` 44 lakhs. During 2017-18, FCI has moved 88 container rakes (as on
17.12.2017) against the target of 100 and the approx. freight saving is ` 359 lakh.
10.FCI is effectively optimizing movement of foodgrains in association with
Railways, while minimising cost.

As shown in table below:-

Improving Storage
1. During 2017-18 (upto November, 2017), storage losses and transit losses have
been contained to (-) 0.04% and 0.32% against the MoU target of 0.36% and
0.36% respectively for FCI.
2. New godowns of 2.61 lakh MT capacity under Private Entrepreneurs Guarantee
(PEG) Scheme have been completed during the year from 01.04.2017 upto
30.11.2017.
3. Further, a capacity of 4,590 MT has been completed and a capacity of 60,440 MT
is under construction under CentralSector Scheme in 2017-18 as on 31.10.2017.
67
4. As per the road map for creation of 100 Lakh MT steel silos, FCI has awarded
work for 1.00 LMT at 2 locations and completed works at 1 location of capacity
0.25 LMT during the year 2017-18 as on 30.11.2017. Government of Punjab has
completed works for a capacity of 1.50 LMT at 3 locations during the year 2017-
18 as on 31.10.2017.

Achievement of fci
1.To handle country wise district by few surplus and few dificit.

2.To ensure availability of food at the time of war,natural calamities in any nation.

3.Food corporation of India is to help in providing a proper price support to

farmers.

4.Food corporation of India helps in storing and packaging of Food items.

5.The main function is to maintain the temperature of the food so that it does not
get spoiled.

Policy Changes

1. Fortification of Staple Food

To address acute malnutrition in the population, a strategy of Fortification in Food

has been adopted.As a consequence of inputs and proactive initiatives taken by the
Department of Food & Public Distribution in consultation with all Stakeholders,
the Food Safety & Standards Authority of India (FSSAI) has operationalized the
standards for fortification of five commodities – Wheat, Rice,Milk, Edible Oil and
Double Fortification of Salt.

These standards came into force w.e.f. 16.10.2016. The Department on its part
advised all States/UTs in December, 2016 and January, 2017 to distribute fortified
wheat flour and fortified edible oil as per FSSAI Standards.

2. Wheat-Rice Policy

Government of India formulated a wheat-rice policy in June, 2016 with an

objective that the States, which annually procure more wheat or rice than their
present annual entitlement/demand for wheat and rice respectively, will be

68
 allocated the preferred foodgrains as per their requirement in the normal NFSA
allocation i.e. AAY and Priority category.

The allocation in the tide over category will be at the discretion of the Department
and subject to availability of foodgrains in the Central Pool and impact on food
subsidy.

To augment the stock of wheat in the Central Pool and to contain the price
volatility in the open market, foodgrain stocking norms that include strategic
reserve of 30 lakh MT of wheat and 20 lakh MT of rice were revised vice versa
from November, 2016 till June, 2017.

3. Additional Allocation of food grains to States/ UTs

The policy regarding additional allocation of food grains to States/UTs in

connection with festivals, natural calamities and law & order situation was
revamped w.e.f. 18.08.2017.

Now, the States/UTs requesting for additional allocation are required to furnish
notification in case of drought and declaration in case of floods.

Under the revamped policy the additional allocation is released only for the non-
NFSA beneficiaries, as the NFSA beneficiaries are otherwise getting their
foodgrain allocations.

The policy regarding “Allocation of Food Grains to Welfare Institutions” and

“Allocation of Food Grains to SC/ST/OBC Hostels” was revamped w.e.f.
01.09.2017 by clubbing both the schemes into a single scheme “Allocation of Food
Grains to Welfare Institutions and Hostels”.

Under the revamped scheme, the States/UTs requesting for allocation of food
grains are required to post the details regarding Institutions/Hostels, total capacity,
present strength, etc. on their respective portals. The CIP continues to be the BPL
rates.

Specifications of Foodgrains

Uniform Specifications of Paddy, Rice and Coarse for the Kharif Marketing Season
2009-2010
Paddy

69
Rice 
Jowar 
Bajra
Maize
Ragi
Uniform Specifications of Paddy, Rice and Coarse for the Kharif Marketing Season
2010-11
Paddy
Rice
Jowar 
Bajra
Maize

Relaxations in the Uniform Specifications

Relaxations Given in KMS-2009-10
Punjab
Haryana
Andhra Pradesh
Tamilnadu
Orissa
Maharastra
 
Relaxations Given inRMS-2010-11

U.P Relaxations in uniform specification of Paddy and Rice for K MS 2010-11
Punjab
Tamilnadu
Andhra Pradesh
Orissa
Chhatishgarh

Non-Issuable (DAMAGED) Foodgrains And Their Disposal:

70
Foodgrains which do not conform to FSSA and further cannot be reconditioned for
normal issue are considered ‘Non-Issuable grains’. Damage to the stock may occur
in the CAP storage or in transit.

Such stocks need to be salvaged to segregate sound grains, for issue under normal
channels. Stocks not fit for normal issue will have to be dealt with as ‘Non-
Issuable grain’. The Non-Issuable stocks on receipt in the godowns or detected in
the depot, are properly checked and segregated on the basis of condition and
proportion of sound grains present into different lots.

The Issuable foodgrains classified under various categories are disposed off as per
procedure. Fresh allocations and sale of Non-Issuable foodgrains held by the FCI
and State Agencies is made only to bonafide registered parties to avoid circulation
of Non-Issuable foodgrains into the market. Executive Directors(Zone) & General
Managers(Region) are vested with full power for disposal of Non-Issuable
foodgrains.

Engineering-Engineering Wing of Food Corporation of India is responsible for

following activities

Civil:

a. Construction and maintenance of covered godowns, Plinths and ancillary

structures like office block, weigh bridge, canteen, tiffin room, isolation
shed, cycle stand, toilets, roads, drains, hand pumps etc.
b. Up-gradation & maintenance of own railway sidings.
c. Construction of Cement concrete roads in view of heavy vehicles plying in
the godowns.
d. Maintenance of FCI flats, Guest Houses spread throughout the country.
e. Implementation of CSR activities in FCI complexes by providing Female
Lav Block, Labour Shed, Safe drinking water facilities. 

Electrical:

1. Construction and maintenance of Internal & External Electrical Installation

in godowns, including HT & LT Installations at various locations.
2. Construction and maintenance of Tube wells and Pumping sets in all FCI
premises.
3. Installation of Solar panels to have energy sufficiency and contribution to
environment.

71
Mechanical:

a. Up-gradation of existing weighbridges to fully electronic, enhancement of

capacity of weigh-bridges as well as installation of new additional
weighbridges as per requirement.
b. Operation and Maintenance of 1,10,000 MT Capacity  existing Silos at
Lucknow, Faridabad, Mandi Gobindgarh, Moga, Jagraon & Hapur.
c. Construction and Maintenance of HQ/ZO/RO/DO Office Buildings and
Institute of Food Security Gurgaon with ancillary facilities.

Others: 

a. Introduction of new technologies in FCI like installation of Turbo

ventilators, Day light harvesting system, Galvalume sheets, Mechanization
of bag handling operations, Bio-Digester technology in toilets etc. 

There is significant addition in infrastructure of FCI after taking over of assets

from Department of Food Government of India in 1965, the engineering activities
were started in 1969. There is considerable  addition to the assets of FCI was
contributed by Engg division.

Export and import-Import and Export Division undertakes the work of Export
and Import of foodgrains as per the guidelines, policy and instructions of
Government of India.

Functions of Import Export Division

 Import and Export of food grains (mainly Wheat and Rice) and issue of
stocks under various schemes of World Food Program/ Government aid on
donation basis to other countries.

 Assisting the Ministry of CAF&PD in formulation of policies regarding

import and export of wheat and rice. Formulating guidelines/procedures to
be followed in import/export of foodgrains in accordance with policy
decision of Government Of India and forwarding the same to all concerned
field offices for necessary compliance.

 Maintaining liaison with concerned agencies like STC, MMTC, PEC,

Railways, Ministry of shipping and Port trusts etc. prior, during and post
import/export operations.

72
 Preparation of agenda/Information/data for meeting of High level
Committee for day to day monitoring and resolving of operational issues
during import/export of foodgrains.

 Preparation of daily bulletin/statement depicting port-wise vessel’s Arrival,

Despatch and Movement of imported stocks during imports and
Port/CPSU/Country wise quantity of foodgrains lifted and shipped during
export of foodgrains.

 Keeping watch on International demand and supply situation as well as

price, in relation to Wheat and Rice.

FUNCTIONS OF FCI
73
1. Procurement. It also ensures effective market intervention thereby keeping
the prices under check and also adding to the overall food security of the country. 

FCI, the nodal central agency of Government of India, along with other State
Agencies undertakes procurement of wheat and paddy under price support
scheme . Coarse grains are procured by State Government Agencies for Central
Pool as per the direction issued by Government of India on time to time. The
procurement under Price Support is taken up mainly to ensure remunerative prices
to the farmers for their produce which works as an incentive for achieving better
production. 

To facilitate procurement of food grains, FCI and various State Agencies in

consultation with the State Government establish a large number of purchase
centres at various mandis and key points. The number of centres and their locations
are decided by the State Governments, based on various parameters, so as to
maximize the MSP operations. For instance for Wheat procurement more than
18,000 procurement centers are operating in RMS 2018-19 & for Rice
procurement more than 35,000 procurement centres are operating in KMS 2017-
18.

2. Storage-The storage function assumes paramount importance in organization

such as Food Corporation of India because of its requirement to hold huge
inventory of food grains over a significant period of time.  Storage plan of FCI is
primarily to meet the storage requirement for holding stocks to meet the
requirements of Public Distribution System and Other Welfare Schemes
undertaken by the Government of India. Also, buffer stock is to be maintained for
ensuring food security of the nation. Adequate scientific storage is pre-requisite to
fulfil the policy objectives assigned to the Food Corporation of India for which FCI
has a network of strategically located storage depots including silos all over India.

Besides having own storage capacity, FCI has hired storage capacities from
Central Warehousing Corporation, State Warehousing Corporations, State
Agencies and Private Parties for short term as well as for guaranteed period under
Private Entrepreneurs Guarantee Scheme.   

New Godowns are being constructed by FCI mainly through Private Participation
under Private Entrepreneurs Guarantee Scheme. FCI is also augmenting and

74
modernizing its storage capacity in the form of silos through Public Private
Partnership

3. Movement-Movement plays a very important role in the working of FCI as

well as in fulfilling the objectives of Food Policy and National Food Security Act.

FCI undertakes movement of foodgrains in order to: 

 Evacuate stocks from surplus regions

 Meet the requirements of deficit regions for NFSA/ TPDS and Other
Schemes
 Create buffer stocks in deficit regions 

Punjab, Haryana and Madhya Pradesh are the surplus States in terms of wheat
procurement vis-a-vis their own consumption. Punjab, Haryana, Andhra Pradesh,
Chhattisgarh and Odessa are surplus States in terms of rice procurement vis-à-vis
their own consumption. Surplus stocks of wheat and rice available in these States
are moved to deficit States to meet the requirements under NFSA/ TPDS and other
schemes as well as to create buffer stocks. 

On an average 40 to 42 million tonnes of foodgrains are transported by FCI across

the country in a year. FCI undertakes massive movement operation of foodgrains
all over the country encompassing around 1925 FCI depots (owned + hired), 440
rail-heads (owned by Indian Railways and others) and 103 FCI own sidings.

Mode of Transportation 

Movement of foodgrains is undertaken by Rail, Road and Waterways. Around 85%

of stocks are moved by rail to different parts of the country. Inter-State movement
by road is mainly undertaken in those parts of the country which are not connected
by rail. A small quantity is also moved by ocean vessels to Lakshadweep and A&N
Islands as well as through coastal shipping and riverine movement to
Kerala/Agartala (Tripura). 

4. Finance-The functions of Finance and Accounts division is primarily

maintenance of Accounts and preparation of annual reports, preparation of Budget
Estimates, claim subsidy from Government of India, Funds Management,
Taxation, Debt collection and Financial evaluation of commercial proposals.

FCI is a statutory Organization constituted under Food Corporation’s Act, 1964

and has been carrying out its operations since 1965 with an objective to trade in
75
food grains and other foodstuffs and for matters connected therewith and
incidentals thereto.  At present FCI is only implementing Government of India
food programme and not involved in any commercial venture. 

5.Sales-In order to achieve the food security of the country, the Sales Division
looks after one of the most important operation i.e. distribution of foodgrains under
TPDS/NFSA & Other Welfare Schemes.

Government of India fulfills the objectives of food security through the Public
Distribution System. Public Distribution System strives to meet the twin objectives
of price support to the farmers for their product and supply of foodgrains at
affordable prices. It is against the stocks procured under price support, Government
releases a certain quantity of foodgrains in each State under the Public Distribution
System. This mission of the Government of India is translated into reality by the
FCI. 

6. Stocks-Food grain stocking norms refers to the level of stock in the

Central Pool that is sufficient to meet the operational requirement of
foodgrains and exigencies at any point of time. Earlier this concept was
termed as Buffer Norms and Strategic Reserve.

Presently stocking norms fixed by Government of India vide OM dated

22.01.2015 comprise:

 Operational stocks:  for meeting monthly distributional requirement

under TPDS and OWS.
 Food security stocks/reserves: for meeting shortfall in procurement.

Stocking norms are for a quarter and consist of operational stock for the
quarter and strategic reserve to take care of short fall in production or
natural calamities. 

7. Quality control-The Quality Control (QC) wing of FCI manned by

qualified and trained personnel is entrusted with enormous task of
procurement & preservation of foodgrains. The foodgrains are procured
as per laid down Specifications of Government of India and inspected
regularly during storage to monitor the quality. Representative samples
of the stocks are drawn for physical and chemical analysis to ensure
76
whether the quality standard meets the parameters of laid down
Specifications of Government of India and Food Safety & Standard
Authority of India (FSSAI). This is done through a network of about
1850 laboratories throughout the Country. Many of the laboratories at
Zonal & Regional levels are well equipped to carry out physical &
chemical analysis of the foodgrains. The District and Depots laboratories
generally undertake physical analysis of foodgrains.

Laboratories across the country are being upgraded with latest

equipments. The IFS (Institute of Food Security) Lab, Gurgaon would
be upgraded as a State of Art Lab.

The senior Q.C. Officers undertake frequent visits to the procurement &
storage points to inspect the quality of foodgrain stocks and advise QC
staff on the spot to ensure procurement of foodgrains conforming to
Specifications and its maintenance during storage at all levels.
8. Vigilance-The Food Corporation of India was setup under the Food
Corporation Act 1964, in order to fulfill following objectives of the
Food Policy:
 Effective price support operations for safeguarding the interests of
the farmers.
 Distribution of food grains throughout the country for public
distribution system
 Maintaining satisfactory level of operational and buffer stocks of
food grains to ensure National Food Security
 Since its inception, FCI has played a significant role in India's success
in transforming the crisis management oriented food security into a
stable security system. Operations of Food Corporation of India,
hereinafter, referred to as FCI, revolve mainly around procurement of
food grains at Minimum Support Price declared by Government of India,
scientific storage of food grains, movement of food grains from
production areas to consumption areas for fulfilling given mandate,
quality control in procurement functions and quality assurance in respect
of food grains to be issued under Public Distribution System and other
welfare schemes and also under schemes of Open Market Sales of food
77
grains for domestic consumption as well as for exports. In addition, there
are other operations too, to support the core operations of FCI; namely,
Engineering, Finance & Accounts, Legal Division, Internal Audit,
Industrial Relations.
Primary responsibility for maintenance of purity, integrity and efficiency
in FCI vests in the Chairman & Managing Director (CMD) of FCI who
is the Head and Chief Executive of the Corporation. The CMD however,
is assisted by an officer called the Chief Vigilance Officer (CVO) in the
discharge of vigilance functions. The CVO acts as a special assistant
/advisor to the CMD and reports directly to him in all matters relating to
vigilance. He heads the Vigilance Division of the organization
concerned and provides a link between is organization and the Central
Vigilance Commissioner and his organization and the Central Bureau of
Investigation. In FCI the CVO has also been designated as Executive
Director (Vigilance).
Vigilance Division Of FCI – Vigilance Division of FCI is headed by
Chief Vigilance Officer who is assisted by a team of officers of various
ranks. The offices of FCI at Zonal and Regional level too have vigilance
set up headed by officers of suitable rank which assists the Zonal
Executive Directors and General Managers, as the case may be.

Research Methodology
78
Research comprises "creative work undertaken on a systematic basis in
order to increase the stock of knowledge, including knowledge of
humans, culture and society, and the use of this stock of knowledge to
devise new applications." It is used to establish or confirm facts,
reaffirm the results of previous work, solve new or existing problems,
support theorems, or develop new theories. A research project may also
be an expansion on past work in the field. Research projects can be used
to develop further knowledge on a topic, or in the example of a school
research project, they can be used to further a student's research prowess
to prepare them for future jobs or reports. To test the validity of
instruments, procedures, or experiments, research may replicate
elements of prior projects or the project as a whole. The primary
purposes of basic research (as opposed to applied research)
are documentation, discovery, interpretation, or the research and
development (R&D) of methods and systems for the advancement of
human knowledge. Approaches to research depend on epistemologies,
which vary considerably both within and between humanities and
sciences. There are several forms of
research: scientific,humanities, artistic,economic,social,business, market
ing, practitioner research, life, technological,etc.Research methodology
is a way to systematically solve the research problem. The research
methodology included various methods and techniques for conducting a
research. “Marketing Research is a systematic design, collection,
analysis, and reporting of data and finding relevant solution to a specific
marketing situation or problem.” Sciences define research as “ the
manipulation of things, concepts or symbols for the purpose of
generalizing to extend, correct or verify knowledge, whether that
knowledge aids in construction of theory or in practice of an art.”
Research is thus, an original contribution to the existing stock of
knowledge marketing for its advancement, the purpose of research is to
discover answers to the questions through the application of scientific
procedure.
Methodology is the systematic, theoretical analysis of the methods
applied to a field of study. It comprises the theoretical analysis of the
79
body of methods and principles associated with a branch of knowledge.
Typically, it encompasses concepts such as paradigm, theoretical model,
phases and quantitative or qualitative techniques.
A methodology does not set out to provide solutions - it is, therefore, not
the same as a method. Instead, a methodology offers the theoretical
underpinning for understanding which method, set of methods, or best
practices can be applied to specific case, for example, to calculate a
specific result.

METHOD OF DATA COLLECTION

80
Data collection is the process of gathering and measuring information on targeted
variables in an established systematic fashion, which then enables one to answer
relevant questions and evaluate outcomes. The data collection component of
research is common to all fields of study including physical and social
sciences, humanities and business. It help scientists and analysts to collect the main
points as gathered information. While methods vary by discipline, the emphasis on
ensuring accurate and honest collection remains the same. The goal for all data
collection is to capture quality evidence that then translates to rich data
analysis and allows the building of a convincing and credible answer to
questions that have been posed.
In this research work both the primary and secondary data has been used.

 Primary data collection=Primary research involves the collection of

original primary data. It is often undertaken after researchers have gained
some insight into an issue by reviewing secondary research or by analyzing
previously collected primary data. It can be accomplished through various
methods, including questionnaires and telephone interviews in market
research, or experiments and direct observations in the physical sciences,
among others.

 Secondary data collection=Secondary data refers to data that was

collected by someone other than the user. Common sources of secondary
data for social science include censuses, information collected by
government departments, organizational records and data that was originally
collected for other research purposes. Primary data, by contrast, are collected
by the investigator conducting the research.
Secondary data analysis can save time that would otherwise be spent collecting
data and, particularly in the case of quantitative data, can provide larger and
higher-quality databases that would be unfeasible for any individual researcher to
collect on their own. In addition, analysts of social and economic change consider
secondary data essential, since it is impossible to conduct a new survey that can
adequately capture past change and/or developments. However, secondary data
analysis can be less useful in marketing research, as data may be outdated or
inaccurate..

SAMPLE DESIGN

81
The Government policy of procurement of Food grains has broad objectives of
ensuring MSP to the farmers and availability of food grains to the weaker sections
at affordable prices. It also ensures effective market intervention thereby keeping
the prices under check and also adding to the overall food security of the country. 

FCI, the nodal central agency of Government of India, along with other State
Agencies undertakes procurement of wheat and paddy under price support
scheme . Coarse grains are procured by State Government Agencies for Central
Pool as per the direction issued by Government of India on time to time. The
procurement under Price Support is taken up mainly to ensure remunerative prices
to the farmers for their produce which works as an incentive for achieving better
production. 

Before the harvest during each Rabi / Kharif Crop season, the Government of India
announces the minimum support prices (MSP) for procurement on the basis of the
recommendation of the Commission of Agricultural Costs and Prices (CACP)
which along with other factors, takes into consideration the cost of various
agricultural inputs and the reasonable margin for the farmers for their produce. 

To facilitate procurement of food grains, FCI and various State Agencies in

consultation with the State Government establish a large number of purchase
centres at various mandis and key points. The number of centres and their locations
are decided by the State Governments, based on various parameters, so as to
maximize the MSP operations. For instance for Wheat procurement more than
18,000 procurement centers are operating in RMS 2018-19 & for Rice
procurement more than 35,000 procurement centres are operating in KMS 2017-
18. Such extensive & effective price support operations have resulted in sustaining
the income of farmers over a period and in providing the required impetus for
higher investment in agriculture sector for improved productivity. 

Whatever stocks which are brought to the Purchase centers falling within the
Government of India’s specifications are purchased at the fixed support price. If
the farmers get prices better than the support price from other buyers such as
traders / millers etc., the farmers are free to sell their produce to them.

Universe

82
The universe consists of all survey elements that qualify for inclusion in the
research study. The precise definition of the universe for a particular study is set by
the research question, which specifies who or what is of interest. The universe is
done in lucknow.

Sample type
There are two types of probability samples: random and stratified. The term random has a very
precise meaning. Each individual in the population of interest has an equal likelihood of
selection. ... Before sampling, the population is divided into characteristics of importance for
the research. Sample type which is best suited in this is random
Sample size
Sample size determination is the act of choosing the number of observations or
replicates to include in a statistical sample. The sample size is an important feature
of any empirical study in which the goal is to make inferences about a population
from a sample. In this godown I have taken two godowns i.e taalkotra and
barabanki.

Sample unit
A sampling unit is one of the units into which an aggregate is divided for the
purpose of sampling, each unit being regarded as individual and indivisible when
the selection is made.

83
 DATA ANALYSIS

(1) What is the capacity of both the Godowns?

Capacity (in tonne)

60000

50000

40000

30000

20000

10000

0
Barabanki Taalkatora

Taalkatora -55000
& Barabanki-39290
Interpretation- The above graph shows that the capacity of the godown in
barabanki is 39290 and taalkatora is having capacity of 55000 in
tonne.Difference between both the godowns 15710.

(2) What is the capacity Utilizations?

84
 Utilizations

70%
60%
50%
40% Sales
30%
20%
10%
0%
Barabanki
Taalkatora

Interpretation- The above graph shows that the capacity utilizations of both
the godown is 41% in taalkatora and 69% in barabanki.
(3) What is the optimum Utilization?

85
 50000
45000
40000
35000
30000
Capacity
25000 Utilization
20000
15000
10000
5000
0
Barabanki Taalkatora

Interpretation- The above graph shows that the capacity utilizations of both
the godown is 41% in taalkatora and 69% in barabanki capacity has been
utilized which is below par

(4) How many rake of wheat placed at Taalkatora & Barabanki?

Barabanki
2
1.8
1.6
1.4
1.2 Barabanki
1
0.8
0.6
0.4
0.2
0
Wheat Rice

Interpretation- The above graph shows that the 4 tonne Wheat at Taalkatora &
2 tonne wheat at Barabanki.
(5) How many rake of rice placed at Taalkatora & Barabanki ?

86
 2 tonne Rice has been placed in Taalkatora no rice in Barabanki.

Taalkatora
4
3.5
3
2.5
Taalkatora
2
1.5
1
0.5
0
Wheat Rice

(6) What was the Quantum of transit loss at Taalkatora & Barabanki ?

25

20

15
Wheat
Rice
10

0
Barabanki Taalkatora

Interpretation- The above graph shows that the quantum transit loss in
barabanki wheat is 16.28843 and at Taalkatora rice is 8.43428.

87
(7) What is the storage loss at Taalkatora & Barabanki?

50000

45000

40000

35000

30000
Capacity
25000 Utilization
Loss
20000

15000

10000

5000

0
Barabanki Taalkatora

Interpretation- The above graph shows that the Taalkatora storage loss is 0.69
& in Barabanki storageb’ loss is 0 .65.

(8) What is the staff strength at Taalkatora & Barabanki?

Staff

40
35
30
25
Staff
20
15
10
5
0

Barabanki
Taalkatora

Interpretation- The above graph shows that the 37 staff at Taalkatora & 7 staff
at Barabanki godown.

88
(9) What is the monthly usage of wheat in Taalkatora & Barabanki?

14000

12000

10000

8000
Receipt
6000 Issue
Gain
Loss
4000

2000

Barabanki
Taalkatora

Interpretation- The above graph shows that the barabanki wheat receipt is
5254.075,issue is 6299.082,gain is 49.915,loss is 00 and in taalkatora wheat
receipt is 13774.526,issue is 8300,gain is 6.412,loss is 00.
(10) What is the monthly usage of rice in Taalkatora & Barabanki?

6000

5000

4000

3000 Receipt
Issue
Gain
2000 Loss

1000

Taalkatora

89
 Interpretation- The above graph shows that the taalkatora rice receipt is
3548.896,issue is 5617,gain is 00,loss is 38.062.

FINDINGS

 After the Data Analysis of this data we come to know that taalkatora
godown capacity is more than barabanki
 When we compare the capacity utilization of Taalkatora godown with the
Barabanki godown, it is found that the capacity of the Talkatora godown is
lesser than the Barabanki godown. Due to this the storage capacity of this
godown affects the distribution of wheat and rice has been under demand.
 More wheat is placed in taalkatora godown.
 Barabanki godown does not contain rice.
 Due to the bad conditions of road Quantum of loss in transit is more in
taalkatora than barabanki.
 Due to the lack of proper Storage capacity loss is more in taalkatora. Or due
to less area of godown the storage is low
 Staff strength is more in taalkatora.

 LEARNING FROM INTERNSHIP

 My internship started from 16th May 2019 with RELIANCE SECURITIES.

The internship period was 6 weeks. During the course of my internship I
learned to open Functions of FCI . I also learned about their working .

90
 LIMITATIONS
1. Identification of poor by the states is not fool proof. A large number of poor
and needy persons are left out and a lot of fake cards are also issued.
2. Fair Price Shop owner gets fake Ration cards and sell the food grains in the
open market.
3. People do not get the permitted amount of food grains from the Fair price
shop.
4. Diversion of Food grains by Fair Price Shops holder and mediator.
5. Many times, good quality food grains are replaced with poor quality cheap
food grains.
6. Public distribution system includes only few food grains such as wheat and
rice, it does not fulfil the requirement of complete nutrition.
7. Uneven distribution of Food generations, procurement and distribution. For
example: north eastern states are very far from Punjab and Haryana, from
where wheat is procured. To transport food grains from Punjab to far flung
areas in North east will entail cost and time both.

Main problem involved in the operation of public distribution system is the issue of
containing the food subsidy to reasonable levels. Other major issues which
confront the system include the issue of targeting the system to benefit the actual
poor and restricting the coverage of public distribution system to only the major
commodities. De-centralization of operations and devolving to the states the key
decision making powers as regards the operation of public distribution system are
some major issues that needs to be addressed.

91
Government agencies can reform the system by introducing innovative ideas such
as food stamps and food credit/debit cards to facilitate better working of the system
with a view to reduce malpractices like diversion and reducing the costs of food
delivered to the poor.
Though government has taken several measures to improve public distribution
system like decentralised procurements, introduction of UIDAI etc. but still these
measures are not completely espoused. More measures like universalization of
public distribution system are need of the hour. Public distribution system can
provide food security only when it covers wide range of food grains. With
introduction of Food Security Ordinance, It is expected that public distribution
system will be able to fulfil the long valued goal of Food security

SWOT ANALYSIS

Strengths

availability of food grains across the country

food grains distribution support from surplus to deficit state
Strong network of distribution food grains
Excellent storage management food grains

Weakness

High requirement of working capital

Inadequate automation with regard to information management
Leakage

Opportunities

Vast domestic market

Improvement in distribution channel
Diversify into non-traditional commodities/ activities

92
Threats

Rapid development
Shift in food habits
Entry of retail sector

CONCLUSION

Despite the huge stock of food grains available in fci godown,stray cases of hunger
deaths are still being reported. The food distribution system, therefore, needs to be
reformed and made more efficient. The represent system could be placed by a
system of food stamps and eventully by a food credit card system. The excess
stocks of food grains that have accumulated with the government is partly a result
of high MSP which often exceeds the levels recommended by CACP. The MSP
should encourage diversification of agriculture production. Food is a basic
necessary of life without it person will be malnourish. Food is such a vital part of
our human existence,it is important to recognize how the impliocations of the
dominant power structure have conditioned a broken food system. Areas that often
affected most negatively by food insecurity are those in urban areas. The market is
an opportunity to support local farmers, increases access to fresh,healthy food and
provide a gathering place for community.
Food security entails ensuring adequate food supply to
people,especially those who are deprived of basic nutrition. Food security has been
a major concern in india. For maintaing a satisfactory level of operational and
buffer stock of food grains and ensure national food security, the food corporation
of India was set up under the FCI act1964. In ensure effective price support
operation for safeguarding the interest of the farmers. Important work that FCI
does is managing the public distribution system. Fci maintains food security in the
country through its four zonal offices. Physical availability of food it is determined

93
by the level of food production, stock levels and net trade or in short we refer to
the supply side of food availability. Food security as we have mentioned above
exists when all people have access to have food and there is a minimum level of
nutritions that is maintained.Taalkatora godown is situated in lucknow.The
capacity utilization of Taalkatora godown with the Barabanki godown, it is found
that the capacity of the Talkatora godown is lesser than the Barabanki godown.
Due to this the storage capacity of this godown affects the distribution of wheat
and rice has been under demand.

BIBLIOGRAPHY

 http://fciweb.nic.in/articles/org
 http://www.fcidelhiro.in/fci_delhi.php
 http://www.scribd.com/doc/20694932/Food-
Corporation-Of-INDIA

94
95