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I.

About FCI

Food Corporation of India was setup on 14th January 1965 under Food Corporation Act 1964 with authorized capital of almost INR 25.0 billion [1] to implement the national policy for price support operations, procurement, storage, preservation, inter-state movement and distribution operations. It was incorporated in order to fulfill following objectives of the Food Policy [3]: 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 Govt. of India provides funds to FCI to meet the cost of fixed assets like Offices, Godowns, Silos, Railway Sidings and Weighbridges. For financing the food grains and sugar operations entrusted to corporation by the Govt. of India, the working capital is provided by the consortium of 44 banks. FCI purchases the food grains for the Central Pool at the procurement prices and issues the same at the Central Issue Prices fixed by the Government of India. The issue price so fixed does not cover the full cost incurred by the Corporation in the procurement, movement, storage and distribution of food grains. The different price represents the consumer subsidy for the Public Distribution System, and is paid to the Corporation by the Government of India. The Corporation also maintains buffer stock of food grains on behalf of the Govt. of India and the carrying charges of the buffer stocks are also reimbursed by the Government to the Corporation.

Food Subsidy released to FCI including sugar (Rs. in Crores #) Year Subsidy
1995-96 1996-97 1997-98 1998-99 5325.45 6016.73 7900.00 9049.34 1999-2K 9002.25 2000-01 11652.13 2001-02 16724.00 2002-03 2003-04 2004-05 200506*

22678.72 23874.04 23327.73 8852.56

* up to 14-07-2005
It operates through 5 zonal offices and a regional office in Delhi. Each year, the Food Corporation purchases roughly 15-20 per cent of India's wheat output and 12-15 per cent of its rice output. The losses suffered by FCI are reimbursed by the Union government, to avoid capital erosion, and thus declared as a subsidy in the annual budget.

II.

Procurement of Food grains

To nurture the Green Revolution, the Government of India introduced the scheme of minimum assured price of foodgrains which are announced well before the commencement of the crop seasons, after taking into account the cost of production \ inter-crop price parity, market prices and other relevant factors. 1. 2. 3. 4. 5. 6. The Food Corporation of India along with other Government agencies provide effective price assurance for wheat, paddy and coarsegrains. FCI and the State Govt. agencies in consultation with the concerned State Govts. establish large number of purchase centres throughout the state to facilitate purchase of foodgrains Centres are selected in such a manner that the farmers are not required to cover more than 10 kms.to bring their produce to the nearest purchase centres of major procuring states. Price support purchases are organized in more than 12,000 centers for wheat and also more than 12,000 centers for paddy every year in the immediate post-harvest season. Such extensive and 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 for improved productivity. To name a few states about Rs.41,000 millions for paddy and 43,000 millions for wheat in Punjab and Rs. 45,000 millions for levy rice in Andhra Pradesh is paid to the farmers/ millers during wheat / rice procurement season. 7. 8. 9. India today produces over 200 million tonnes of foodgrains as against a mere 50 million tonnes in 1950. In the last two decades, foodgrain procurement by Government agencies have witnessed a quantum jump from 4 million tonnes to over 25 million tonnes per annum. Foodgrains are procured according to the Government - prescribed quality standards. production. 11. This helps to meet the commitments of the Public Distribution System and for building pipeline and buffer stock. 10. Each year, the Food Corporation purchases roughly 15-20% of India's wheat production and 12-15% of its rice

III. 1.

Storage Management Another facet of the Corporation's manifold activities is the provision of scientific storage for the millions of tonnes of foodgrains procured by it. In order to provide easy physical access in deficit, remote and inaccessible areas, the FCI has a network of storage depots strategically located all over India. These depots include silos, godowns and an indigenous method developed by FCI, called Cover and Plinth (CAP). CAP storage is a term given to storage of foodgrains in the open with adequate precautions such as rat and damp proof plinths, use of Dunn age and covering of stacks with specially fabricated polythene covers etc. FCI has 24.18 million tonnes (owned & hired) of storage capacity in over 1451 godowns all over India In order to reduce storage and transit losses of foodgrains and to bring additional resources through Private Sectors participations., Govt. of India had announced a National Policy on Handling Storage and Transportation of Foodgrains in June, 2004 for Bulk and conventional godowns.In the Ist phase,after a series of deliberations, it was approved that total capacity of lakhs MT be created at the identified based depots and feild depots through private sector participation on Build-Own & Operate (BOO) Basis. RITES were appointed as consultants for the project. A letter of acceptance of proposal of the project in two circuits has been awarded to M/s. Advani Exports Ltd. , the lowest bidder to complete the Project in 3 years from the date of execution of the service agreement.

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IV.

Transport Management

Ensuring accessibility to food in a country of India's size is a Herculean task. The foodgrains are transported from the surplus States to the deficit States. The foodgrain surplus is mainly confined to the Northern States, transportation involves long distance throughout the country. Stocks procured in the markets and purchase centers is first collected in the nearest depot and from there dispatched to the recipient States within a limited time. FCI moves about 250 Lakh tonnes of foodgrains over an average distance of 1500 Kms. Movement Lakh Tonnes (Prov.) Sugar 12.0 11.0 11.0 7.0 3.0 3.0 2.0 0.8 1.4 1.8 2.4 1.8 1.9 3.5

Year 1996-1997 1997-1998 1998-1999 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 2008-2009 2009-2010

Foodgrain 235.5 191.1 190.8 221.9 161.6 204.5 248.8 297.0 338.7 315.5 288.7 277.92 256.65 312.25

Total 247.8 202.1 201.8 228.9 164.6 207.5 250.8 297.8 340.1 317.3 291.1 279.7 258.6 315.8

Regularly rice and wheat procured in the Northern States is moved to far flung corners Imphal, Manipur or Kanyakumari in Tamnilnadu and to the higher reaches of the Himalayas in the North. An average of 12,00,000 bags (50 Kg) of foodgrains are transported every day from the producing States to the consuming areas, by rail, road, inland waterways etc. The stocks to Kashmir valley, H.P, Manipur, Sikkim, Meghalaya, which don't have rail link are fed by road A&N Islands and Lakhadweep etc are fed by inland waterways. Thus by effective planning and Management of the transport System FCI regularly moves foodgrain and sugar from the procuring Region to the concerning Region.

V.

Distribution of Foodgrains

The national objective of growth with social justice and progressive improvements in the living standards of the population make it imperative to ensure that foodgrain is made available at reasonable prices. 1. Public Distribution of foodgrains has always been an integral part of India s overall food policy. It has been evolved to reach the urban as well as the rural population in order to protect the consumers from the fluctuating and escalating price syndrome. Continuous availability of foodgrain is ensured through about 5 lakhs fair price shops spread throughout the country. A steady availability of foodgrains at fixed prices is assured which is lower than actual costs due to Govt. policy of providing subsidy that absorbs a part of the economic cost. The Govt. of India introduced a scheme called Targetted Public Distribution Scheme (TPDS) effective from June, 1997. The stocks are issued under this scheme in the following two categories:a. Below Poverty Line (BPL): Determination of the families under this category in various states is based on the recommendation of the Planning Commission. A fixed quantity of 35 Kg. foodgrains per family per month is issued under this category. The stocks are issued at highly subsidized Price of Rs.4.15 per Kg. of wheat and Rs. 5.65 per Kg. of rice. b. b) Above Poverty Line ( APL) Families which are not covered under BPL are placed under this category. The stocks are issued at Central Issue Price of Rs. 6.10 per Kg. of wheat and Rs. 8.30 per Kg. of rice. Antyodaya Anna Yojna - During the year 2000-2001 Govt. of India decided to release foodgrains under Antyodaya Anna Yojna. Under this scheme the poorest strata of population out of earlier identified BPL population is covered. Foodgrains are being provided to 2.5 crores poorest of the poor families out of the BPL families at highly subsidized rates of Rs.2/- per kg. of wheat and Rs.3/- per kg. of rice by FCI. This is the biggest food security scheme in the world.

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Allotment/Offtake of Wheat/Rice (Figs. In Lakh tones) APL BPL AAY TPDS TOTAL Mid Day Meal Nutrition Prog Hostels Annapurna Grain Bank NPAG WFP Defence Others2 Dcp Offtake Open Sale Grand Total
1

Scheme Qty. allotted Wheat Rice 118.3 59.7 60.2 113.9 34.8 67.2 213.4 240.7 4.9 22.8 5.8 3.4 0.6 2.5 0.3 0.6 0.0 0.1 0.2 0.6 0.4 0.1 1.2 1.2 40.5 24.0 0.0 0.0 46.5 10.3 313.9 306.2

Qty. lifted Wheat 71.2 42.6 25.6 139.4 4.5 5.1 0.7 0.3 0.1 0.1 0.5 1.3 4.7 50.9 16.4 223.8 Rice 49.5 65.4 43.5 158.4 18.5 2.4 2.7 0.6 0.1 0.3 0.1 1.2 8.8 78.4 5.2 276.5

1 For the period 4/2009 to 3/2010 2 Includes additional allocations made at various prices for relief/festivals/incentives etc. The Central Issue Price (CIP):(Rate: Rs./Qtl.) Commodity Effective From BPL Families APL Families Wheat 01- 07- 2002 415 610 Rice Common 01- 07- 2002 565 795* Rice Grade-A 01- 07- 2002 565 830 (*): Applicable to J&K, Himachal Pradesh, Sikkim, Uttaranchal and NE States. There are number of other welfare schemes of the Govt. of India : (a) Mid-Day-Meal-Scheme (MDM)- The Govt. of India have introduced MDM National Programme of Nutrition Support to Primary Education in Primary Schools w.e.f. 15.8.1995. Under the scheme every students upto 5th class of Govt. schools is entitled for 3 Kgs. of wheat/rice per month @ 100 Grams. Since October 2007 allocation of foodgrains have also been made for the students from 6th to 8th class in the educationally backward blocks and every student is entitled for 150 Grams of foodgrains per child per school day. The Scheme is partly run by Govt./Aided Schools/Local Bodies to serve free cooked / processed hot meal. FCI is supplying foodgrains free of cost to the State/UTs. This scheme is partly financed by Ministry of HRD. (b) Wheat Based Nutrition Programme (WBNP) - A scheme run by Department of Women and Child Development, Ministry of Women & Child Development for providing nutritious food to children below 6 years of age and expectant/lactating women. Foodgrains supplied by FCI at BPL rates. (c)&(d) SC/ST/OBC Hostels & Welfare Institutions & Hostels- The Ministry of CAF&PD and the Ministry of Social justice & Empowerment coordinate to monitor of the Scheme for providing foodgrains to SC/ST/OBC Hostels. Hostels having students belonging to SC/ST/OBC categories are eligible to draw 15 Kgs. Foodgrains per resident per month. The Government of India decided that w.e.f. 2.11.2000 foodgrains (wheat/rice) will also be allotted to the state Governments at the rate of 5 Kg per head per month for indigent people living in Welfare Institutions, such as. Beggar Homes, Home for Nari Niketan etc. sponsored by the State Govts. and the concerned administration. Foodgrains are supplied by FCI at BPL rates. It may be clarified that from the year 2002-03, the MOCAF&PD has been making the requirement of the State/UT under the head "Welfare Institutions & Hostels" to meet the requirement of the State/UT for providing foodgrains to different type of welfare institutions. Since April 2005, the Ministry of CAF &PD has enhanced quota of allotment under this scheme to 5% of the monthly allotment made under BPL & AAY. Presently, the foodgrains is being allotted by MoCAF&Pd on the basis of average offtake during last three years under the scheme. (e) Annapurna Scheme- Indigent Senior Citizens of 65 years of age or above eligible for National Old Age Pension under NOAPS, but not getting pension can get 10 Kgs of foodgrains per month. FCI is issuing foodgrains under this scheme to State/UT Govts. at BPL rates. Under This scheme of Ministry of Social Justice & Empowerment, Indigent people living in Welfare institutions like Beggar Homes, Orphanages, Nari Niketans etc. are given 15 kgs of foodgrains per person per month. Foodgrains are

AAY Families 200 300 300

supplied by FCI at BPL rates. Presently, the scheme is being run by the Ministry of CAF&PD. (f) Sampoorna Gramin Rozgar Yojana- A scheme financially supported by Ministry of Rural Development in which foodgrains are supplied to the States/ UTs by FCI free of cost. (g) Special Component of Sampoorna Gramin Rozgar Yojna - Under the Special component of the SGRY financed by Ministry of Rural Development for augmenting food security through additional wage employment during natural calamity. FCI release foodgrains free of cost to the State/UTs. Since 1st April 2008 no allotment of foodgrains has been made by the Govt. of India under SGRY.

(h) Foodgrains to Adolescent Girls Pregnant and Lactating Mothers ( AGPLM). GOI introduced this Scheme w.e.f January , 2003 Under this scheme foodgrains is being supplied by FCI at BPL prices to the State/UT Govt. for Adolescent Girls, Pregnant and Lactating Mothers ( AGPLM). The identified under nourished woman/girl is provide 6 Kg. of foodgrains (wheat/rice)/month. The scheme is partly supported by Planning Commission. The scheme is being run by MoCAF&PD with the new name Nutritional Programme for Adolescent Girls (NPAG). (i) World Food Programme (WFP) - FCI is sparing stocks to WFP projects from the Central Pool stocks as and when required by them. FCI is working as 'FOOD BANK' for World Food Programme(WFP) projects in India . When India was deficit of foodgrains, WFP used to get stocks to meet the deficiency through import. (J) Emergency Feeding Programme - Under this scheme, Ministry of CAF & PD releases allocation of rice at BPL rates, for KBK Districts (Bolangir, Kalahandi, Koraput, Malakangiri, Nabarangpur, Naupada, Rayagada & Sonepur) of Orissa State on monthly basis. Under this scheme, rice @ 7.5 kg/beneficiary/month is issued for 2 lakh beneficiaries. This programme is being run by the Ministry of CAF&PD. (k) Grain Bank - This scheme provides Grants for establishment of village Grain Bank to prevent deaths of Schedule Tribes specially children in remote and backward tribal villages facing or likely to face starvation and also to improve nutritional standards. The scheme provides funds for building storage facility, procurement of weights & measures and for the purchase of initial stock of one quintal of foodgrains of local variety for each family. The allocation of foodgrains was made by the GOI, Ministry of Tribal Affairs during the year 2002-2003. Under this scheme foodgrains are allotted to States at BPL rate. Since 2006-07 the scheme is being run by Ministry of CAF&PD. The cost of foodgrains as food component is being paid to FCI in advance at economic cost. State Govts. are lifting foodgrains free of cost from FCI. (l) National Food for Work Programme - this programme has been launched by the Prime Minister during November 2004 for providing foodgrains in identified 150 most backward districts of the country. The beneficiaries of this programme are labourers engaged by the State Govt. in development work. Foodgrains is given as part of wages under the scheme to the rural poor at the rate of 5 kg. per manday. More than 5 kg. foodgrains can be given to the labourers under this programme in exceptional cases subject to a minimum of 25% of wages to be paid in cash. Under this programme foodgrains ae issued to states/UTs free of cost. This scheme is mentored by Ministry of Rural Development. Since 2006-07 the scheme has withheld

VI.

Stock Management

The Central Pool stock are maintained by FCI and State Govts. and their agencies. The total stock in Central Pool as on 28/02/2010 is 453.38(Figs. in Lakh MT) Stock in Central pool as on 28/02/2010 Foodgrains Rice* Wheat Total With FCI 137.94 76.29 214.23 With State Govt. / Agencies 128.55 104.31 232.86 Grand Total 266.49 180.60 447.09

* Unmilled Paddy with FCI & State agencies also shown in terms of Rice Stocks of Foodgrains & Sugar in Cenral Pool as on 28.02.2010 (Figs. in Lakh MT) In Storage 266.49 180.60 0.00 447.09 3.79 0.26 451.14 In Transit 3.01 3.28 0.00 6.29 0.00 0.16 6.45 Total 269.50 183.88 0.00 453.38 3.79 0.42 457.59

Rice Wheat Wheat lying in Mandies Total Coarse Grains Sugar Grand Total Position on 06/03/2010

References 1. Authorised capital $600m

2. Objectives of the food policy