Reading Material APSWC

Dr.
Shalendra, Program Director
INDEX
Sr. No
Items
Page No
i.
Preface
ii.
List of resources
ii
iii.
List of participants
iii
iv.
Content of programs
iv
1.
Introduction to warehousing
2.
Supply chain management & logistics
3.
Role of moisture, temperature and humidity during storage
4.
Quality assurance - pest control and disinfection
10
5.
Insurance and claim settlement
16
6.
Warehouse and inventory management
18
7.
Sampling procedure for bags and bulk storage
20
8.
Procurement of Rice and Maize
23
9.
Grades and standards of agricultural commodities
30
10.
Code of storage practices
41
11.
Administration/Office procedure
43
12.
Control of storage losses
48
13.
Statutory frame work for agricultural produce
54
14.
Stacking of goods and maintaining stock account
59
15.
Negotiable Warehouse Receipts and pledge finance
62
16.
Futures & Spot Market Role of Warehouses
67
17.
Annexures
77
PREFACE
Warehousing is important for agriculture not only for ensuring the availability of
quality agricultural commodities over time but also for its implications on food
security and growth of agricultural sector. The liberalization of trade environment
for economy in general and agricultural in particular has encouraged participation of
private players leading to increased demand for warehousing in agricultural sector
and from non-agriculture sectors as well.
The integral role to be played by warehouses in recently introduced concepts like
National Agricultural Market and forward and futures market has further emphasized
the importance of warehousing in the entire supply chain, besides spot market. The
state like Karnataka has identified warehouses as a market place. The opportunities
for warehousing sector are increasing and so is the competition to offer best services
at most competitive prices. The role of warehouse manager and other staff is
immense in operating the warehouses efficiently at the highest level.
Acknowledging the role of training in enhancing the operational efficiency, Andhra
Pradesh State Warehouse Corporation, Hyderabad planned to design training
programmes in collaboration with CCS National Institute of Agricultural Marketing
(NIAM), Jaipur for its warehousing staff.
Accordingly, NIAM has designed and is organizing three programmes during the
month of June 2016 at different locations namely Tirupati, Vijayawada and
Vishakhapatnam. The methodology adopted for the programmes will includes
lectures, interaction, discussion and sharing national and international experiences.
In order to facilitate participants come prepared and grasp maximum from the
programmes, this training manual which is a compilation of literature on all the
topics being covered during the programmes along with other relevant information
is prepared.
I express my sincere gratitude to Shri A R Sukumar, Managing Director, Andhra
Pradesh Warehousing Corporation, Hyderabad for their support, guidance and
partnership with NIAM. The support provided by Shri Vijaya Bhaskar (APSWC) is
sincerely acknowledged. I am also thankful to all the speakers for their willingness
to contribute in the programmes and sharing information for training manual.
I believe the training manual to be comprehensive in coverage of information and
iswell received by all concerned.
Dr. Shalendra
Program Director
i
DETAILS OF RESOURCES
Sr. No
Name
Organizations
Shri A R Sukumar
Managing Director, APSWC, Hyderabad
Shri Vijaya Bhaskar
APSWC, Hyderabad
Shri P E Prasad
Central Warehousing Corporation
Dr. K Jayaraj
IGMRI
Shri R Sambasivarao
Food Corporation of India
Shri Murali Mohan
Shri TVSRVP Murthy
Shri M Srinivasulu, FCI
Shri T VRao
10
Dr. M S Jairath
NIAM Jaipur
11
Dr. Shalendra
NIAM, Jaipur
12
NABARD and NCDEX
ii
LIST OF PARTICIPANTS
Sr.
No
Tirupati
6 8 June 2016
Vijayawada
10 12 June 2016
Vishakhapatnam
14 16 June 2016
K Nandini
D Chandra Sekhar
Y Sambasiva Rao
M Balaswamy
V Kasi Reddy
M Yogimuneiah
M Naga Raju
B Tulasi Krishna
S Gnana Ratnam
H Shiva Sankar Rao
D Anuradha
N KondalaRao
D Lakshmi Shailaja
M Sreenivasa Rao
S Basheer Ahmed
P Viswanath
Y Samulr
M Sreenivasa Rao
RMD Mustafa Javeed
T Ramaiah
P Satyanarayana
Syed Jani Basha
E Ravi Kumar
B Ravi Raj
P Ramesh
P Prasanna Kumar
U Venugopal
10
M A Rasheed
S Ravi Kumar
IUMN Prasad Naidu
11
B Kumar
G V Subrahmanyam
A Mohammed Ziya
12
P Vijaya Reddy
U Venkatavara Prasad
VSVN Radha Krishna
13
N Parvathi
N Narasimha Reddy
D Satyam
14
P Vamshidhar Reddy
D Venkateshwara Rao
A Suneetha
15
N Swapna
M Krishna Rao
LVV Bhasak Rao
16
M Sivannaryana
SSC Papa Reddy
V K JagannadhaSahu
17
S K Khuddus
M Suryanarayana
P V Murali Kishore
18
G Padmavathi
S K SilarBasha
P D Mallik
19
R Veeraiah
K Ramakrishna Reddy
K Rambabu
20
B Suresh
S Venkateswarulu
P Adinarayana
iii
Content of Program CCS National Institute of Agricultural Marketing, Jaipur, Rajasthan &
Andhra Pradesh State Warehousing Corporation, Hyderabad, Andhra Pradesh
Date
Tirupati
06.06.2016
Vijayawada
10.06.2016
Vishakhapatnam
14.06.2016
Tirupati
07.06.2016
Vijayawada
11.06.2016
Vishakhapatnam
15.06.2016
Tirupati
08.06.2016
Vijayawada
12.06.2016
Vishakhapatnam
16.06.2016
Time
08.30 09.00 AM
09.00 10.30 AM
10.30 11.30 PM
11.30 01.00 PM
01.00 02.00 PM
02.00 03.30 PM
03.30 05.00 PM
05.00 06.30 PM
Topic
Registration
Inauguration and Introduction to Training Objectives
Benefits of Warehousing and WDRA Act 2007
Supply chain Management & logistics
Lunch
Role of moisture, temperature and humidity during storage
Quality Assurance - Pest Control and Disinfection
Insurance of Warehouses, goods stored and fidelity Claim Settlement
08.30 10.00 AM
10.00 11.30 PM
11.30 01.00 PM
01.00 02.00 PM
02.00 03.30 PM
03.30 05.00 PM
05.00 06.30 PM
Warehouse and Inventory Management

Procurement of Rice and maize and its analysis
Lunch
Grades and standards of Agricultural commodities
Code of storage practices
Administration/Office procedure, fundamental accounting system
08.30 10.00 AM
10.00 11.30 PM
11.30 01.00 PM
Control of storage losses within the norms

Shri M Srinivasulu
Statutory frame work for Agricultural produce
Shri M Srinivasulu
Stacking of goods and maintaining stock account and security measures at Shri T V Rao
Warehouses
Lunch
Negotiable Warehouse Receipts and pledge & finance
NABARD
Futures & Spot market Role of Warehouses
NCDEX
Conclusion and feedback
Dr. Shalendra
01.00 02.00 PM
02.00 03.30 PM
03.30 05.00 PM
05.00 onward
iv
Speaker
Shri Sukumar
Dr. Shalendra
Shri P E Prasad
Dr K Jayaraj
Dr K Jayaraj
Shri P E Prasad/
Insurance Company
Shri P E Prasad
Shri R Sambasivarao
Shri R Sambasivarao
Shri Murali Mohan
Shri Murali Mohan
Shri TVSRVP Murthy
1.
Introduction
It is well known fact that the small farmer does not have the economic strength to
retain the produce with himself till the market prices are favourable. Keeping this in
view, there is need to provide the farming community with facilities for scientific
storage so that wastage and produce deterioration are avoided and also to enable it to
meet its credit requirement without being compelled to sell the produce at a time
when prices are low.
A network of rural godowns can address some of the problems faced by producers.
(i)
Firstly, the farmers are compelled to sell their produce immediately after
harvest at prevailing prices, which are bound to be low.
(ii)
Secondly, the farmers are compelled to store food grains and other products
in sub-standard godowns leading to deterioration in quality of these
commodities and consequently low return to them.
(iii)
Thirdly, storage in the sub-standard godowns leads to loss due to attack by

rodents, insects and pests etc.
Production and Marketable Surplus

The Green Revolution during mid-sixties has brought about a paradigm shift in
agricultural production scenario in the country. The green revolution technologies
involving the use of HYV seeds, fertilizers, pesticides, farm power etc. supported by
agriculture extension services, enabled the farmers to produce bumper crops.
India achieved tremendous increase in agriculture production leading to increased
marketable surplus of agricultural commodities.
Agricultural Infrastructure
The agriculture infrastructure need to be organised and developed so as to meet the
regular demand of consumers and meet unforeseen natural disasters viz. floods,
drought, earthquakes etc. It should also provide impetus for boosting exports. For
the purpose a combination of efforts is required, which include harnessing resources
of public and private sectors both domestic and foreign to build and operate bulk
handling, storage and transportation systems.
Why Store: Proper storage of food grains & other commodities is necessary, interalia, for the following reasons:
To maintain a regular & adequate supply of good grains throughout the year
for the consumers including farmers themselves.
To get better prices when the glut situation is over.
Access institution credit to cheaper rates.
To safeguard against various kinds of losses.
Kinds of Storage
It has been estimated by governmental agencies that about 60-70 Percent of total
food grains produced in the country has to be stored & retained at the local level,
while the remaining is to be handled by the organized government, private & food
processing industries.
Varieties of storage facilities have been developed for a wide range of foodgrain
produced in the country. They can be categorized under two sub-heads.
1)
Traditional Storage System: (Generally being adopted in the country)

Structures made of straw, bamboo, reeds, hesin, mud clay and bricks
and underground storage structure.
2)
Metallic bins, Ferro-cement bins, plywood bins, polythene bins etc.
Scientific Storage System:

Yard or ground storage system
Special commodities warehouses
Cold storage warehouses
Tank storage
General warehouses
Storage Capacity
The storage capacity in the county is quite inadequate to the surplus produced by the
agriculture. Taking this into consideration, government introduced back ended
subsidy scheme for construction of rural godowns throughout the country for nonperishables. The AP SWC is the first to take advantage of the new scheme and
invited private parties to an attractive proposition of construction of godowns for

storage of food grains in various districts of Andhra Pradesh.
Bulk Storage Facilities Created by the Government
Over the years, the production of food grains is continuously increasing. The
government for many years procured all quantities of foodgrains produced by the
farmers. But increasing stocks in government hands have limited its capacity to buy
more quantities.
In view of this, construction of Rural Godowns in the country by the private
entrepreneurs and farmers is the need of the hour.
2.
Supply Chain & Logistics Management
Supply Chain Management is an important component of business where products

are transitioned from vendors to customers while minimizing inventory levels as
well as are housing and transportation costs. Efficient supply chain management
enables manufacturers to manage costs, deliver products on time and be responsive
to customer needs, which can enhance the performance of the entire business
process.
The new approach to supply chain management requires organizations to improve
their communications and information flow and convert the traditional supply chain
into an adoptive and real time supply network.
Logistics entails managing and controlling the flow of goods, information and other
resources from their source of origin to their end destination in a timely and cost
effective manner. Apart from physical movement, logistics also includes various
stream lining functions such as integration of information, warehousing, material
handling, inventory management etc. The logistics sector in India has been growing
at an annual rate of 8-10%, since 2002. High growth in foreign trade necessitates
improvements in the efficiencies of all the components across the logistics value
chain.
Warehousing can play a key role in organizations integrated logistics strategies & in
building and maintaining good relationships between supply chain partners.
Detailed presentation given at annexure 1.
Contributed by Shri P E Prasad
3.
Role of Temperature, Moisture Content and Humidity during

Storage of Foodgrain
During storage, foodgrain are affected by both biotic and abiotic factors. Biotic
factors are insects, rodents, birds and microflora while the abiotic factors are
temperature, moisture content, humidity and the storage structure. The inherent
characteristics of foodgrain also have a profound effect on their storability. They are
living organisms and breathe. During respiration, starch and oxygen are converted in
carbon dioxide, water and heat. An increase in the storage temperature leads to an
increase in the respiration rate. Nutrients being respired lead to losses in the weight
and quality of stored produce. They contain water (moisture content) and hold water
around them (in vapour form known as inter granular humidity). The moisture
content of the produce keeps fluctuating and being hygroscopic in nature, tends to be
in equilibrium with the ambient conditions; loosing or gaining moisture. They have
very low heat conductivity. This means that the fluctuations in temperature in stored
produce are only noticeable over short distances or long periods. This leads to the
accumulation of heat with all of the accompanying disadvantages, such as increased
respiration, higher insect infestation, fungal growth and condensation.
The temperature of the air, the relative humidity and the moisture content of the
produce are closely inter-related. They complement each other and together affect
the quality badly.
The temperature has a great influence on the respiration rate of the stored produce
and pest organisms as well as on the relative humidity and grain moisture content.
The temperatures found in tropical and subtropical climates provide ideal conditions
for insect pests and, in places of high relative humidity, also for fungi.
Process
Dry heating
Wet heating
Moisture
Content (range)
11-14%
14-18%
Temperature
(range)
102F to 110F
110F to l45F
Casual organisms
Insects, mites &
psocids Fungi
The moisture content of the stored produce and the relative humidity of the
surrounding air in the godown attempt to find a state of equilibrium. Depending
upon the prevailing conditions of relative humidity, the stored produce either
releases moisture into atmosphere or absorbs moisture from the atmosphere until
5
equilibrium has been reached. When the stored produce is moist, there is a danger of
fungi and mould development.
Fungi start growing at a relative humidity of above 65 70%. The safe moisture
content levels for food grains for long term storage are therefore those which
provide equilibrium at a relative humidity of 65-70%.
The values for the safe moisture content vary with the differences in the chemical
compositions of the various types of the stored products. Grains with high lipid
contents will have much lower equilibrium moisture content than cereals which are
composed largely of starch.
In storage, the moisture content of the grain tends to move from the places having
higher vapour pressure to lower vapour pressure to equalize the moisture content
throughout the storage structure. This is called moisture migration. Moisture
migration may lead to cake formation in stored produce.
Fig 1. Spoilage of grain due to development of insects & fungi.

Fig 2. Outside air temperature below grain temperature.
Fig 3. Outside air temperature above grain temperature.
6
The movement of moisture from one region to another region and its accumulation
there may damage the grain due to differences between the temperature of the grain
and ambient air which induce air convection currents in the grain. When ambient
temperature goes below grain temperature damage may take place at the top centre
of the bin (Fig. 2) when the ambient temperature rises above grain temperature
damage may take place in the bottom of the structures (Fig. 3). Water condensation
also damages the grain which may occur in the same way as the ice is kept in glass
jar in summer and water droplets condense on the outer surface of the glass jar.
The moisture content of the air may vary, as well as that of the stored produce. The
moisture absorbed by the air in the form of water vapour is referred to as absolute
humidity.
The air is however not able to absorb an unlimited amount of moisture. There is a
maximum amount the atmosphere can absorb at any specific temperature. If the
atmosphere does actually contain this maximum amount, it is called saturation
moisture content of the air. The relative humidity at this saturation point is 100%. If
the absolute humidity is only half the saturation moisture content, the relative
humidity is 50%. If it is quarter of it, the relative humidity is 25%. The relative
humidity thus expresses the degree of saturation of the air with vapour in percent.
As already mentioned, the saturation moisture content of the air depends on the
temperature, i.e. the higher the temperature of the atmosphere the more moisture it is
able to absorb. This means that saturation is reached with different amounts of water
vapour at different temperatures.
Condensation occurs in godown primarily when there are great differences in the
temperature inside and outside the structure. A typical example is when the outside
walls become hotter or colder in consequence of the temperature fluctuations
between day and night. Imbalances in temperature thus cause the air in the stored
produce to circulate.
If the outside walls of the godown are warmed by the sun radiation, the inside air
close to the walls will also be heated. The increase in its temperature will cause the
relative humidity to drop. The air thus able to absorb additional moisture from the
7
stored food grains. If this air then comes in contact with colder surfaces, it will cool
down. The drop in its temperature will cause the relative humidity to raise causing
condensation. The same applies if the outside temperature is lower than the
temperature inside the godown.
Condensation occurs in godowns mainly close to the walls and roof from where it
drops down on the stored produce. Sometimes it is also found under the tarpaulins of
the stacked commodities. This often leads to mould development and sprouting.
Condensation may also occur if there is a high insect infestation at certain points in
the stored produce.
The respiratory activities of the insects lead to an increase in the temperature and the
humidity. Hot spots are formed. If the temperature in one of these hot spots passes
40 degrees Celsius, it becomes too hot for the insects and they will move to cooler
surroundings. The hot spot thus spreads.
Stored grain insect pests generally find the best conditions for development at
temperatures between 28 and 33 0C and relative humidity between 60 and 80%.
Near to these perfect conditions, a rapid sequence of generations will lead to mass
reproduction. Moulds will begin to develop at relative humidity between 65-70%.
The higher the relative humidity, better are the conditions for the development of
fungi and mould. Fungi under certain conditions release poisonous substances called
mycotoxins.
Summary of the effects of temperature, moisture content and humidity on the
quality of the stored food grains
High temperatures, high relative humidity and high moisture content of the stored
produce are favourable for the development of pest organisms. The respiration of the
pests and of the stored produce releases moisture and heat, which further improves
the living conditions and leads to an increase in the pest population.
Rainfall, ground moisture and a drop in temperature increase the relative humidity.
Rain water and ground moisture may be absorbed directly by the grain.
High relative humidity leads to a rise in moisture content of the stored produce and
under certain conditions leads to condensation. If no measures are taken to
counteract this, considerable losses are likely to occur. Only when the necessary
steps are taken, which include drying of the produce, good storage hygiene,
controlled ventilation and pest control, the quality of the stored produce are
maintained.
Low, even temperatures and low relative humidity are favourable for maintaining
the quality of the stored produce.
Therefore: store cool and dry!
Contributed by Dr K Jayaraj
4. Quality Assurance - Pest Control and Disinfection

Control of Stored Grain Insect Pests in Food Storage Godown
In a food storage godown, insect pests are seen crawling on the bags surface, walls
and floor; seen flying in the empty spaces between the stacks, the wall and also in
the space between the stack and the roof. They are also present inside the bag, in the
inter granular spaces and inside the grains (obviously, not seen). Depending upon
the location of their presence, insect infestation can be classified as crawling
infestation, flying infestation and internal infestation.
SPRAYING (to control crawling infestation)
Crawling infestation can be controlled by treating the stacks by spraying with
recommended chemicals. In India, deltamethrin is being used as spray to control the
crawling infestation.
Deltamethrin is a synthetic pyrethroid. It is exceptionally potent against the whole
spectrum of stored product insect pests. It is effective at very low dosages. It is
exceptionally stable on grain. The basic mode of action of deltamethrin on insect is
by contact and by ingestion.
Commercial product of deltamethrin is available in wettable powder form at 2.5%
concentration. For spraying on the bag surfaces, 40 grams of deltamethrin 2.5 WP is
mixed in 1 liter (1000 ml) of water and applied at the rate of 3 liters of prepared
solution (120 mg deltamethrin in 3000ml of water) on 100 square meters of surface
area. Frequency of application is 75 90 days. While spraying the bag stacks,
always start on the top surface (5th surface which is often neglected) and then
spray from top of the stack to the bottom on all four surfaces. It is also sprayed on
the walls and the floor.
Deltamethrin persists for a long time on the surface of the grains, if sprayed on the
naked grain and does not enter the grain, thereby leaving no residues in the grain.
Deltamethrin has a unique feature of attracting the insects and hence, adults and
larvae of some of the free moving insects come from inside the bag to the surface,
crawl on the bag, thereby getting poisoned and get killed. Some times these insects
are found in moribund stage and might recoup after some time.
10
Needless to say, all precautions must be taken while handling this chemical, like,
wearing protective clothing and mask, spraying in the wind direction, washing hands
and feet thoroughly with water and soap after the spray etc.
Crawling infestation can also be controlled by spraying with Malathion, which is
available commercially in 50% EC form. This organophosphorus compound is
mixed with water in the ratio of 1:100 and sprayed at the rate of 3 liters of prepared
solution per 100 square meters. The frequency of spraying is 15 days.
AIR CHARGING (to control flying infestation)
Adult moths are often seen flying in the godown. They can be controlled by
spraying the chemical in the empty spaces (which is called air-charging) between the
stack and the roof of the godown, between the side of the stack and the wall or
adjoining stack and also on the walls and floor of the godown.
For controlling moths in a food storage godown, DDVP (Dichlorovos or Dimethyl2,2- Dichloro Vinyl Phosphate) is recommended.
DDVP has a pleasant smell and
a colourless liquid. It is soluble in water at 1% and soluble in most organic solvents.

Dichlorovos has high vapour pressure and speedy knock down effect. It is
characterized among common insecticide compounds, by its high vapour pressure
and by high insecticidal activity in the vapour phase. The vapour pressure of
dichlorovos at room temperature is approximately 1000 times greater than that of
Malathion at the same temperature.
Dichlorovos is efficient against most stored product pests; especially against moths.
It is outstandingly effective in vapour form. It performs best in storage system,
which results in a physical or mechanical distribution of the vapour throughout the
stored grain.
It has a short residual stability. It is readily metabolized and rapidly excreted.
Because of the high penetrating effect, the residue on the whole grain readily
transfers in flour. But these residues in flour degrade quickly and are completely
11
destroyed in the cooking of bread or rice. Recent tests proved DDVP residues to be
potentially carcinogenous, hence is restricted from spraying on the bag surfaces.
Dichlorovos is commercially available as 76% EC. It is mixed in water at the ratio
of 1:150 and sprayed on walls and floor at the rate of 3 liters per 100 square meters.
In empty spaces, it is air charged (sprayed) at the rate of 1 liter per 300 square
meters. Frequency of application is 15 days.
FUMIGATION (to control internal infestation):
Most of the stored grain insect pests complete their life cycle inside grains. Some of
the insects start infesting the grains right from the field itself and hence, their
developing stages will be inside the grains. Insects by nature move along the inner
surface of the bags and hence not visible outside the bags for most part of the day.
Such internal infestation can be controlled by fumigating the stocks with the
recommended fumigant.
In fumigation, a gas is added to an enclosure for the purpose of controlling or
eliminating undesirable organisms. It is necessary to contain the fumigant gas while
it acts on the target organisms and to restrict its escape into areas where it may be
dangerous to human health. All commonly used fumigants can be dangerous at
concentrations more dilute than normally used in fumigation.
Fumigation is a process of exposing insects or insect infested stocks to the fumes of
a chemical at lethal concentration for a specified time in an enclosed space.
Fumigant is a chemical, which at required temperature and pressure exists in
gaseous form at sufficient concentration to be lethal to a given pest.
Fumigation is a complex process. Only properly equipped and trained personnel in
appropriately prepared fumigation enclosures can carry out efficient fumigations.
Fumigation is a precise operation, requiring considerable expertise and cannot be
undertaken without proper preparation. It is important that management realize this
and ensure that due planning is done before fumigation is carried out.
Phosphine (Hydrogen phosphide) has come into prominence as an effective
fumigant to control insects in grain and a number of other stored products. This is
12
largely the result of the development of methods whereby the gas can be generated
within a grain mass without undue risk of either fire or excessive exposure of
fumigators. Safe and effective fumigations with phosphine will result only if
fumigators adopt sound working procedures.
Phosphine may be obtained from the hydrolysis (reaction with water) of a range of
metal phosphide formulations. Aluminum phosphide preparations are most common
but magnesium based materials also are available. Under tropical conditions,
aluminium phosphide formulations are to be preferred over those of magnesium
phosphide. In India aluminium phosphide formulation is commonly used in tablet
form, though pouch packing, ampoule packing and cage packings are also available.
Each tablet weighs 3 grams and releases approximately 1 gram of phosphine.
Eggs and pupae are much more tolerant of phosphine than larvae or adults. Although
control strategies for most fumigants are based on the application of a dosage that is
high enough to kill the most tolerant stage, this is not the case with phosphine. In
most cases a dosage is applied that is sufficient to kill larvae and adults only.
The key to effective fumigation with phosphine therefore depends on holding the
gas long enough for the more tolerant eggs and pupae to continue their development
to larvae and adults, whereupon they succumb.
Clearly, it is essential to retain the gas for long enough for this development to
occur. This may be achieved by fumigating only in gastight enclosures. Fumigations
in which most gas is lost by about the fifth day, or even just from pockets within the
enclosures, will fail, and yet in killing the mobile and thus more visible larvae and
adults will create an illusion of success.
The objectives of phosphine fumigation are to maintain toxic concentrations of
phosphine, throughout the enclosure, long enough to kill the most tolerant stages of
the most tolerant species that may be found. Phosphines empirical formula is PH3,
molecular weight is 34, boiling point is 87C, specific gravity (gas) is 1.2 (air =
1.0) and vapour pressure at 30C (atm) is 42. Pure phosphine is colourless and
odourless. In practice, however, impurities in the gas produced possess a
13
characteristic odour that in most instances makes phosphine detectable at

concentrations down to less than the hygienic standard of 0.3 ppm.
The odour associated with phosphine is described as resembling garlic or calcium
carbide or impure acetylene. Absence of odour does not, however, necessarily
indicate absence of phosphine.
Phosphine is reported to be spontaneously flammable at temperatures above 100C
and at reduced pressures, especially in dry atmospheres. Concentrations of
phosphine above 1.7% in air form an explosive mixture. However, commercial
preparations that produce phosphine either contain substances that reputedly reduce
the fire hazard or substances that control the rate of production of phosphine from
the phosphide, thus restricting the concentration of phosphine generated close to the
formulation.
Since phosphine is highly toxic, exposure of humans to even small amounts should
be avoided. Poisoning can result from inhalation of the gas or ingestion of tablets or
pellets of the formulation, but the gas is not absorbed through the skin. At normal
dosages, phosphine appears to have virtually no effect on the germination of seeds
held at safe moisture contents, but it may slightly reduce the vigour of subsequent
seedlings.
Aluminium phosphide tablets are applied at the dose of 3 tablets (each tablet
weighing 3 grams and releasing about 1 gram of phosphine) per ton of grain and the
exposure period is minimum of 7 days. If time is not a constraint, exposure period
can be extended up to 10 days. Under no circumstances, the exposure period should
be curtailed to less than 7 days. To undertake grain stack fumigation, a gas tight
fumigation cover and proper sealant to make the fumigating chamber airtight are
necessary. The stack to be fumigated should be built on pallets (dunnage), which act
as a plenum that helps in the initial distribution of the gas, and facilitates easy and
efficient distribution of the gas in the entire chamber. The total area of dunnage
should not exceed the base of the stack.
The fumigation cover in folded position is first taken on to the top of the stack and
unfolded with its corners correctly positioned over those of the stack. Care should be
taken to avoid undulations or folds on top or on the sides. Next the cover must be
14
carefully inspected to find all holes, tears, and weak spots. Where faults are found,
these should be marked and repaired only after the inspection has been completed.
Before any other action is taken to apply the fumigant, the in-charge must ensure
that enough aluminium phosphide tablets and paper or cardboard trays are available
on hand. The quantity of phosphine generating tablets (aluminium phosphide
tablets) required for the dosage must now be placed into the paper or cardboard
trays. Gloves must be worn for this operation. To prevent the possibility of gas
ignition and fire, the tablets must never be piled or heaped on top of one another.
They must be spread out across the bottom of the tray in a single layer. The tray
containing the tablets is then pushed under the stack, through the space between the
pallet and floor (Plenum). To ensure easy introduction of the trays containing the
tablets, care should be taken to place the pallets in such a way that their bearers must
point into the center of the stack base. The trays should be placed on all four sides
and close to the edge of the stack so that it can later be removed without any
difficulty. The edges of the cover are sealed properly with sand snakes or with glue
tape.
The stack is left undisturbed for a minimum period of 7 days. Remember to put
warning signboards that the stack is under fumigation and not to be disturbed or
opened until the expiry of the exposure period.
After 7 days of exposure period, the cover is lifted up carefully and folded properly
to be used in next fumigation. The trays are carefully removed, which contain
grayish-white dust. This dust (aluminium hydroxide) still contains 3 5% unreacted
aluminium phosphide. These residues are hazardous and must be disposed off
carefully.
The stack is then sprayed with a residual insecticide like malathion or deltamethrin
after a representative sample is drawn from the stack to find out the success of the
fumigation.
Contributed by Dr K Jayaraj
15
5.
Insurance of Warehouses, Goods Stored and Fidelity
Stocks stored in warehouses, machinery and warehouses are exposed to risks of fire,
flood & thefts, riots & strikes, terrorism, natural calamities, misappropriation by
employers etc. Insurance saves the companies from sudden & un-expected losses to
the stores and buildings.
Insurance of the goods & properties, may be of Private, Public & contract
warehouses is of immense help especially for the goods stored in public ware houses
where the warehouse men act as bailee for stocks of its depositors.
Major Insurance Policies are:
1)
Standard Fire and Special Perils Policy covering risks of fire, flood, cyclone,
riots, strike and malicious damage for Depositors stock & material damage
for all stocks.
2)
Standard Fire and Special Perils Policing covering risks for the buildings
situated in earthquake zone.
3)
Terrorism covers for North Eastern States.
4)
Burglary & Theft Policy
5)
Fidelity Guarantee Insurance Policies
6)
Public Liability Insurance Policy
7)
Special Contingency Policy
8)
Group Mediclaim Policies
9)
Umbrella Policy to cover building & its contents
10)
Marine Insurance Policy (to cover transit insurance)
11)
Motor Vehicle Policy
Claim settlements are done as per the policy guidelines. Salvage disposal is to be
done by the surveyors. Insurance claim is settled by the Insurance Company and the
16
bailee i.e. custodians of the goods shall compensate the loss to the depositor after
deducting the outstanding dues, if any.In case of dedicated warehousing building
insurance is done by the owner of the godowns & stock insurance is by the
dedicated warehousing company. The stock insurance policy taken by the dedicated
warehousing operator should be endorsed to the owner of the warehouse.
17
6.
Warehouse & Inventory Management
Today, the country has an estimates storage capacity of approximately 107 Million
Metric Tons in Government sectors & Public Sectors. Out of this 20 mmt is held by
Private Sectors.The need for warehousing has increased in recent years due to
agriculture and retail growth across the country.
When supply exceeds demand, warehouses store goods in anticipation of customers
requirements; when demand exceeds supply, warehouses can speed up the
movement of the goods to customers by providing additional services like packing
and assembling.
Warehousing of foodgrain, fertilizers, seeds, etc. is an economic activity which deals
with price stabilization, avoids distress sale of goods and help farmers in getting
remunerative prices.
Agriculture warehousing in India is mostly dominated by CWC, FCI & SWCs,
NBHC & Civil Suppliers
Corporations.The
Cold
Chain Segment in India

consists of a dozen of
large players who provide
services
ranging
refrigeration
from
equipment
and storage to integrated logistics. A large number of logistics companies and

warehouseshave identified the cold chain opportunity and are actively investing in
setting up of cold chain infrastructure across to country.
Inventory Management enables identification and tracking of inventory the
location, condition and amount of all the furnished goods, components and raw
materials of warehouse operations can be viewed and monitored. The inventory can
be roated according to FIFO/FEFO principles and other related factors. Lot, stack
control, serial number capture date code tracking, catch weights inventory, aging
and expiration dates provide additional visibility and flexibility.
18
Introduction/Implementation of modern technology for efficient handling,

warehousing operations, mechanization/automation of operation, reducing human
interface in handling inventory is the need of the hour. This keeps the
warehousing/inventory costs low.
Developing competitive warehousing facilities to compete globally by bringing
down high logistics & warehousing costs is the way forward.
19
7.
Drawing a representative sample is an important and essential part of quality

assessment of food grains at various stages. If the sample is not representative there
is no assurance for true quality of grain. The most important factor while drawing a
sample is to ensure that the sample drawn represents the lot in its all perspectives.
When the commodity involved is liquid or a homogenous mass, drawing of sample
does not pose much of problem. But when the commodity is solid either in the form
of granules or in powder and composite mass is heterogeneous, drawing of samples
become complex and requires extra care.
The approved standard procedure needs to be strictly followed. The Bureau of
Indian Standard (BIS) has developed a standard procedure in drawl of samples. In
magnitude of acceptance of many lots and fixing of price the sampling shall be done
on the scale of standard procedure. As per the standard BIS 2814-1978 and BIS
3714-1978, the sampling of bags is as follows:
Scale of sampling in bags
Up to 10 bags sample should be drawn from all bags.
10-100bags - 10% of bags at random selection.
More than 100 Bags the square root method is to be followed.
In case of sampling of procurement of rice consignment the scale of sample is
revised in accordance with BIS IS-14818-2000 (Square root method) as detailed
below:
a)
For example a consignment comprising 200 bags

The square root of 200 = 14.142
Make up to 14 groups each having 14 bags (the total bags are 196).
The remaining four bags another 15th group. A total of 15 bags have to be selected.
For this purpose select any one of the bag (from 1 to 14) from 14 groups. But from
15th group any one bag out of 4 bags is to be selected. And now draw sample from
15 bags out of 200 Bags consignment.
20
b)
Consignment comprising 500 Bags

The square root of 500 = 22.360
Make up to 22 groups of 22 bags in each group (the total bags are 484).
The remaining 16bags another 23rdgroup. A total of 23 bags have to be selected. For
this purpose select any one of the bag (from 1 to 22) from 22 groups. But from 23rd
group any one bag out of 16 bags is to be selected. Now draw sample from 23 bags
out of 500 Bags consignment.
From selected bags, sample is drawn by pocker/parkhi. However bags may be cut
open at seams in order to ascertain quality of stocks in the bags.
For the subsequent checks at various levels after acceptance and stacking where it is
not feasible to select desired bags as BIS 14818-2000 the samples is to be drawn by
parkhi from stack bags as per the procedure. The sampling should be drawn from
10% of peripheral bags from all four sides of stack in zig zag manner and also in the
form of x from the top layer. The composite sample from the consignment/stack
three test samples are to be prepared each sample should contain 500 Gms with a
moisture bag of 150 Gms for analysis purpose at the field/District labs during
acceptance/inspections.
Scale of Sampling in bulk
Depending upon the size and quantity of consignment in a bulk, the sampling is
done as per the details given below:
Up to 300 Mts : In 30 Spots
Up to 1000 Mts: In 50 Spots
Above 1000 Mts: In 100 Spots
Procedure for sampling
Sampling of a bulk shall be drawn either with a thermo sampler or a deep bin probe.
When a thermo sampler is used the instrument shall be pushed to the desired depth,
give an upward jerk, allow for a minute to fill up the temperature recorded and the
samples shall be pulled out. The deep bin probe can be used only for a depth of 1.5
mts, the instrument is inserted by closing position and opened when it is reached
21
desired depth, then the tube shall be opened for about half a minute allow to collect
the grain and pulled out after being closed.
The sample shall be drawn when the product is in motion condition either with the
scoop or pelican type sampler at time intervals depending upon the rate of flow.
Preparation of composite sample
All the primary samples drawn from the same lot shall be thoroughly mixed and
blended to constitute a homogenous composite sample to represent the lot in respect
of the quality. The composite sample should be at least 2.5 kgs out of which three
test samples/ final samples shall be prepared, each comprising of 500 gms and 150g
for determination of moisture. The sample shall be enclosed in cloth bags along with
a polythene bag for moisture. A sample slip shall be inserted inside the cloth bag
with all the relevant details pertaining to lot and cloth bag with sample also should
contain same particulars as mentioned in the sample slip. The cloth bags after filling
the sample is to be tied with jute twine and sealed properly. The sample so prepared
from the composite sample shall be given one to buyer, one to seller and the last
should be retained for the reference purposes.
22
8.
Procurement of Rice and Maize and analysis:
During 1963 the Ministry of Food, Govt of India has been entrusted with taking all
measures to control the price, supply and distribution of Food grains. As a first step,
it formulated a plan equating supply with demand on all India basis and introduced
rationing to give fixed quantity of food grains at fixed price to each individual. To
meet the supply the Central Govt requested the State Govts to procure foodgrain.
The principle behind procurement policy is to pay remunerative price to the
producer for his investment and the consumer gets his food at reasonable price. The
Govt procures notified varities at notified rates subjected to the quality cuts on the
basis of specifications. CACP recommends the MSP every year based on the cost of
production.
Types of Procurement
1)
Levy procurement: It is a tax levied by the State Govt on the Producer/

Trader/Miller dealing in the essential commodities. It is also known as price
stabilization scheme because the Govt does not collect the entire quantity at
procurement rate but allow the miller to sell the part of it in the free market at
prevailing market rates.
2)
Commercial purchase: The Commercial purchase is also under taken of

various commodities to meet the requirement. The price payable and the
specifications will vary depending upon the requirement of the organizations.
3)
Requisition: In period of scarcity when levy procurement does prove to be

insufficient due to market price being very high and stocks with the Govt
being low, Govt resorts to requisition. The rates payable, varities to be
procured and the conditioned are notified by the Govt in Requisitioning Order.
Procurement is a seasonal work and especially wheat and paddy are procured in a
short span in various states. Quality assessments at Mandis level, Handling,
Transportation to storage points are some of the operations to be attended on top
priority and are time bound. In levy procurement uniform specifications are
formulated by the Govt of India every year before starting of procurement
operations. Experienced and qualified technical persons are attached to the
23
Procurement centers for acceptance of stocks as per uniform specification laid down
by the Govt of India.
Classification of Paddy and Rice varieties
Classification of various varities of Paddy/Rice is a measure of the quality and basis
for price fixation. Scientifically classification of all the varities grown in the country
has been done into various groups earlier by Dr. K.Ramaih and Dr.S.V .Pingale, on
the basis of length/ breadth ratio. Later on Dr Balasubramanyam Committee
classified all the noted varities into three groups (super fine, fine and common). And
the present classification of single grain specification i.e. Grade A and Common
introduced by Govt of India from 1997 is being adopted for acceptance of stocks. In
single grade specification variety has no criteria and stocks are being accepted on
the basis of length/ breadth ratio only.
Analysis of Rice and Maize stocks
As per laid down procedure of sampling and analysis the composite samples are
drawn from the prescribed number of bags or heap meant for acceptance, the test
samples are prepared from the composite sample as per procedure and subjected for
analysis either at procurement centers/ District Labs. The method of analysis of
samples is prescribed in BIS IS 4333 (Part 1 and part 2) 1967.
The general condition of sample before analysis is to be examined with regards to its
condition i.e. free from odour, infestation, clear and dry, sound and wholesome and
merchantable condition. If the in-organic foreign matter found to be more 500 gms
of sample is to be taken and sieved thoroughly and picked up in-organic foreign
matter contents and calculate the percentage. The in-organic foreign matter
percentage should not exceed 0.25 %, if it exceeds the stock should be rejected and
advice the party to re-offer the stocks after improvement.
The representative sample of 500 gms after assessment of moisture content is to be
divided in to two equal parts through sample divider and one portion of divided
sample is to be spread on the table and scooped out 20 gms in case of Rice and 50
gms in case of Maize. Out of the 20 gms segregate various refractions as detailed in
24
uniform specifications of Rice and Maize and calculate the refractions percentage
(Uniform specifications of Rice / Maize are provided at the last of the wrire-up).
If the Dehusk grain refraction seems to be more and doubtful with regards to polish
the Dehusk test is to be conducted as per the procedure and confirm the Dehusk
percentage.
The results of analysis of all the refractions should confirm within the limits and
then only the offered stock is treated in acceptable condition. If any one of the
refraction exceeds beyond rejection limit, the stock is treated as Beyond Rejection
Limits and it should be rejected procedurally.
The terminologies of various refractions of Rice and Maize in uniform specifications
as illustrated in BIS-IS-2813-1995 are detailed under.

Refractions: All components in food grains which differ from sound grains.
Foreign matter: It includes in-organic and Organic matter. The in-organic

matter shall include sand, gravel, mud, stones metallic pieces etc. Organic
matter shall include husk, chaff, straw, weed seeds and other edible grains
other than rice. Paddy shall be considered as organic foreign matter in Rice.
Broken: Pieces of sound Kernels that are less than of the size of the full
kernels. In case of Dals, Pieces that are less than the size of of split pulses
shall be considered as broken.
a)
Big Broken: those pieces of Rice kernels which are equal to or

smaller than but bigger than of the average length of full kernel.
b)
Small Broken: Those pieces of Rice kernel which do not exceed

the average length of the full kernel.
c)
Fragment: pieces of kernels that are less than 1/8size of full kernel.
Damaged: Kernels or Pieces of kernels that are sprouted or internally

damaged as a result of heat, moisture, weather or microbes.
Slightly damaged or touched: Kernels or pieces of kernels that are damaged

or discolored superficially so as not to affect the quality of the material.
Insect damage: Kernel that have partially or wholly bored by the insects
injurious to grain
25
Discolor: Kernels or pieces of kernels that have changed the colour as a

result of deteriorative changes.
Chalky: Kernels or pieces of kernels of which at least of the portion is

opaque, milky white in colour and brittle in nature.
Red grains: Kernels or pieces of kernels having more than th of the

surface covered with red cuticle.
Admixture of lower class: Presence of variety of the lower class grain other
than the desired class.
Dehusked Grain: Kernels whole or broken which have more than th of

surface area of the kernel covered with bran.
Other Food Grains: Food grains other than the grain under consideration.
Immature grain: Kernels or pieces of grain kernels that are not fully
developed.
Weeviled Grain: Grain kernels that are partially or wholly bored by the
insects injurious to grain
Moisture Content: The loss of mass caused as a result of heating for two
hours at 130-1330C under specified conditions and expressed as percentage.
26
27
28
29
9.
Grades and Standards of Agricultural Commodities
This is a process of segregating a commodity into different groups based on quality

depending upon the consumers acceptance and demand. Grading of a commodity
can be done at Producer, Manufacturer, and Wholesaler, Retailer level depending
upon its final use, either for Industrial purpose or for indirect / direct human
consumption. Graded produce not only fetches better price for producer but also
opens avenues to the consumer to select product of his choice. Grading facilitates
provision to store a commodity which can withstand longer storage
Advantages of Grading

It brings confidence between the buyer and the seller.
It facilitates interstate and international marketing.
Disputes in the market can be solved amicably.
Stability of the price is ensured.
Farmers can take loans easily from the banks on the basis of grades of
produce stored in the godown
Arbitrary fixation of price by middlemen is eliminated.
Brings about improvement of the crop.
Reduces risk of producer and seller in transactions.
Future marketing is facilitated. Grades become a commercial measure of

quality.
Standards of Paddy
Promotion of standardization and grading of agricultural commodities is an
important aspect of agricultural marketing. The agricultural commodities are
heterogeneous and hence it is essential to grade these commodities as per standards
to command better price both at domestic or international market. Sale of Paddy is
offered on the basis of variety, wholesomeness, appearance, colour, presence of
foreign matter, damaged grains, broken grains, admixture of inferior variety,
moisture, harmful contaminants, etc. A quality grain is one which meets the end user
specifications with respect to range of pre-determined Quality and Safety standards.
30
Important Parameters Responsible for Quality

Following Parameters are important in determination of QUALITY of Paddy
Wholesomeness, appearance, colour
Foreign matter(organic and inorganic)
Damaged grains
Broken grains
Immature/Shriveled grains
Weevilled grains
Admixture
Moisture content
Following SAFETY parameters are important:
Pesticides residue
Poisonous/Heavy metals
Aflatoxin
Uric acid
Microbial load
Important parameters by which grades can be differentiated in case of paddy are
Foreign matter
Admixture
Damaged/Immature/Weevilled grains
Uniform Specification for All Varieties of Paddy (Marketing Season 2004-2005)

Paddy shall be in sound merchantable condition, dry, clean, wholesome, of good
food value, uniform in colour and size of grains and free from moulds, weevils,
obnoxious smell, Argemone maxicana, Lathyrus sativus (kesari), admixture of
deleterious substances.
31
Paddy will be classified into Grade A and common groups.

Schedule of Specification
Sr. No
1.
Refractions
Maximum
Limits(%)
Foreign matter
a) Inorganic
1.0
b) Organic
1.0
Damaged, discoloured, sprouted and weevilled

grains
3.0
Immature, Shrunken and shriveled grains
3.0
Admixture of lower class
8.0
Moisture
17.0
NOTE: Within the overall limit of 1.0% for organic foreign matter, poisonous seeds
shall not exceed 0.5% of which Dhatura and Akra seeds (Vicia species) not to
exceed 0.025% and 0.2% respectively.
Some Definitions
Foreign Matter: Includes inorganic and organic matter. The inorganic matter shall
include sand, gravel, dirt, pebbles, stones, glass and metallic pieces, lumps of earth,
clay and mud. Organic matter shall include husk, chaff, straw, weed seeds and other
inedible grains. Paddy shall be considered as foreign matter in commodities other
than paddy.
Damaged: Kernels or pieces of kernels that are sprouted or internally damaged as a
result of heat, moisture, weather or microbes.
Discolored: Kernels or pieces of kernels that have changed the colour as a result of
deteriorative changes.
Weeviled Grains: Weeviled grains are grain kernels that are partially or wholly
bored by insects injurious to grain but do not include germ-eaten grains and eggspotted grains.
Immature: Kernels or pieces of grain kernels that are not fully developed.
32
Varietal Admixture: The presence of a variety of the same grain other than the
variety in consideration.
Moisture: The loss in mass caused as a result of heating for two hours at 130 to
1330C under specified conditions and expressed as percentage.
Other Foodgrains: foodgrains other than the grain under consideration.
Slightly damaged: Kernels or pieces of kernels that are damaged or discoloured,
superficially so as not to affect the quality of the material.
Brokens: Pieces of sound kernels that are less than three-fourths of the size of the
full kernels. In case of dals, pieces that are less than the size of three-fourths of the
split pulses shall be considered as brokens.
Standards Applicable for Storage of Paddy
Central Warehousing Corporation works as an agent of the government for
purchase, sale, storage and distribution of agricultural and industrial commodities,
seeds, fertilizers and notified commodities for individual, cooperatives and other
institutions in the country. CWC provides modern efficient warehousing to ensure
maximum returns to the growers with better opportunities. It provides scientific
facilities to the farmers for the stock of agricultural produce at a reasonable cost.
CWC issues Warehouse Receipts to a person depositing goods in the warehouse.
The banking institutions accept the Warehouse Receipts as collateral security for
grant of loans to the holder of the Warehouse Receipt on its being endorsed and
delivered to them. Thus, warehousing plays an active role in marketing and also
provides socio-economic gains to the farmers, who otherwise get exploited by the
middlemen and are forced to have distress sales.
Standards of Central Warehousing Corporation
The CWC has following categorization for deciding the period of storability of
paddy in the warehouses.
33
Percentage of Weevilled grains:

Upto
1%
Above 1% upto 4%
Above 4% upto 7%
Above 7% upto 15%
In order to have better storability of paddy, farmers are advised to ensure that paddy
for storage has Weevilled grains less than 1% (by count).
Standards Applicable for Domestic Market
The Prevention of Food Adulteration Act, 1954 (PFA Standards)
Prevention of Food Adulteration Rules, 1955 (PFA Rules) have been notified to
carry out the provisions of the Prevention of Food Adulteration Act, 1954. These
rules define the standards of quality and fix the limit of variability permissible in
respect of article of food. These rules also provide guidelines for packing and
labeling of an article of food. Standards framed under the provisions of the rules are
popularly called PFA standards. PFA standards prescribe minimum limit for Quality
as well as Safety parameters. PFA standards are minimum standards and are
mandatory. They do not differentiate between Quality. Food articles being sold in
the market should comply with PFA standards.
Quality Parameters
Quality standards of Paddy are not prescribed in PFA Rules, 1955.
Safety Parameters
Paddy is not as such consumed as food. However, it is suggested that after removal
of husk, the resultant product (rice) must comply with limits for food safety
parameters.
Important Parameters Responsible for Quality
Following Parameters are important in determination of QUALITY of wheat :

Wholesomeness, appearance, colour,
Foreign matter(organic and inorganic)
Damaged grains
Broken grains
34
Immature/Shriveled grains
Weevilled grains
Wheat of other variety
Other food grains
Moisture content
Following SAFETY parameters are important :

Pesticides residue
Poisonous/Heavy metals
Aflatoxin
Uric acid
Microbial load
Important parameters by which grades can be differentiated in case of wheat are

Foreign matter,
Damaged/slightly damaged
Broken grains
Other food grains,
Weevilled/Immature/Shriveled grains,
Moisture content,
Filth,
Presence of weeds,
Karnal bunt and ergot affected grains.
Standards Applicable for Purchases by Food Corporation of India (FCI) and

National Agricultural Cooperative Marketing Federation of India Ltd. (NAFED).
The main objectives of the FCI are

Effective price support operations for safeguarding the interests of the

farmers.
Distribution of foodgrains throughout the country for Public Distribution

system and other Govt. of India schemes, and
Maintaining satisfactory level of operational/buffer stocks of foodgrains to

ensure national food security.
35
The main objectives of the NAFED are

Providing marketing support to the farmers through its commercial

purchases
Acting as an Agency of Government of India for purchases under Market

Intervention Scheme (MIS).
Assisting farmers by supply of agricultural inputs.
To meet these obligations, the FCI & NAFED make purchases of wheat and for this
purpose following standards for all varieties of wheat are applicable (Marketing
Season 2005-2006).
Wheat shall

be the dried mature grains of Triticum vulgare, T. compactum T.

sphaerococcum, T.durum, T.aestivum and T.dicoccum.
have natural size, shape, colour and lusture.
be sweet, clean, wholesome and free from moulds, obnoxious smell,

discolouration, admixture of deleterious substances including toxic weed
seeds and all other impurities.
be in sound merchantable condition.
not have any admixture of Argemone mexicana and Lathyrus sativus (kesari)
in any form, colouring matter, and any obnoxious, deleterious and toxic
material.
conform to Prevention of Food Adulteration Rules, 1955.
Schedule showing the maximum permissible limits of different Refractions in Fair

Average Quality of Wheat
---------------------------------------------------------------------------------------------------------------------------------Foreign
Other
Matter
Food
Damaged grains
Slightly
damaged
Grains
%
Shrivelled &
broken grains
grains
%
---------------------------------------------------------------------------------------------------------------------------------0.75
2.0
2.0
6.0
7.0
----------------------------------------------------------------------------------------------------------------------------------
36
Other Conditions:
Moisture in excess of 12% and upto 14% will be discounted at full value.
Stocks containing moisture in excess of 14% are to be rejected.
Within the overall limit specified for foreign matter, the poisonous weed
seeds shall not exceed 0.4% of which Dhatura and Akra (Vicia species) shall
not be more than 0.025% and 0.2% by weight respectively.
Kernels with glumes will not be treated as unsound grains. During physical
analysis the glumes will be removed and treated as organic foreign matter.
Within the overall limit specified for damaged grains, ergot affected grains
shall not exceed 0.05%.
In case of stocks having living infestation, a cut at the rate of one rupee per
quintal may be charged as fumigation charges.
For weevilled grains determined by count, following price cut will be imposed,

from the beginning of the season till end of August the rate of cut will be one
rupee per quintal, for every 1% or part thereof.
from 1st September till end of October,no cut will be imposed up to 1%

while for any excess, the cut will be @Rs.1/- per qtl.,for every 1% or part
thereof.
from 1st November till end of season no cut will be imposed upto 2% while
for any excess the cut will be @ Rs.1/- per qtl, for every 1% or part thereof.
stocks containing weevilled grains in excess of 3% will be rejected.
Standards of Wheat prescribed in PFA Rules, 1955 are as follows

Quality Parameters
Description: Wheat shall be dried mature grains of Triticum aestivum Linn.,Triticum
vulgare vill.,Triticum durum Desf, Triticum sphaerococcum perc.,Triticum dicoccum
schubl, Triticum compactum Host.
It shall be sweet, clean and wholesome.
It shall also conform to the following standards, namely:
Moisture: Not more than 14 per cent by weight (obtained by heating the pulverized
grains at 130 oC. 133 oC. for two hours).
37
Foreign matter (extraneous matter) : Not more than 1 per cent by weight of which
not more 0.25 percent by weight shall be mineral matter and not more than 0.10
percent weight shall be impurities of animal origin.
Other Edible Grains : Not more than 6 per cent by weight.
Damaged Grains: Not more than 6 per cent by weight including Karnal bunt affected
grains and ergot affected grains.
Weevilled Grains : Not more than 10 per cent by count.
Provided that the total of foreign matter, other edible grains shall not exceed 12
percent by weight.
Safety Parameters: Limits for insecticides and pesticides
Following maximum limits are prescribed for residues of insecticides and pesticides
Sr.
No
Name of insecticides
Tolerance Limit
mg/kg. (ppm)
Aldrin, dieldrin, (The limits apply to aldrin and dialdrin singly

or in any combination and are expressed as dieldrin)
0.01
Bitertanol
0.05
Benomyl
0.50
Carbaryl
1.5
Chlordane (residue to be measured as cis plus trans chlordane)
0.02
Chlorfenvinphos (residues to be measured as alpha and beta

isomers of chlorfenvinphos)
0.025
Chlorpyrifos
0.05
Cypermethrin (sum of isomers) (fat soluble residue)
0.05
Carbendazim
0.50
10
Carbofuran(Sum of carbofuran and 3-hydroxy carbofuran

expressed as carbofuran)
0.10
11
Diazinon
0.05
12
Dichlorvos (Content of dichloracetaldehyde (D.C.A) be

reported where possible
1.0
13
Decamethrin/Delta methrin
0.50
14
2,4-D
0.01
15
Dithiocarbamates
0.20
16
Ethion
0.025
17
Fenitrothion
0.02
18
Fenthion
0.10
38
Sr.
No
Name of insecticides
Tolerance Limit
mg/kg. (ppm)
19
Heptachlor
0.01
20
Hexachlorocyclohexane and its isomers

(Gamma isomer known as Lindane)
0.10
21
Hydrogen cyanide
37.5
22
Inorganic bromide (determined and expressed as total bromide

from all sources)
25.0
23
Malathion (Malathion to be determined and expressed as

combined residue of malathion and malaoxon)
4.0
24
Methyl Choloro phenoxyacetic Acid (MCPA)
0.05
25
Monocrotophos
0.025
26
Oxydemeton methyl
0.02
27
Paraquat-Dichloride(Determined as paraquat cations)
0.1
28
Phosphamidon residues (expressed as the sum of phosphamidon 0.05

and its desethyl derivative).
29
Phenthoate
0.05
30
Phorate (sum of phorate, its oxygen analogue and their

sulphoxide and sulphones, expressed as phorate)
0.05
31
Pirimiphos-methyl
5.00
32
Trichlorfon
0.05
33
Thiometon (residuesm determined as thiometon its sulfoxide

and sulphone expressed as thiometon)
0.025
34
Tridemorph
0.1
35
Propicomazole
0.05
36
Sulfosalfuron
0.02
37
Trifluralin
0.05
38
Chlorimuron-ethyl
0.05
39
Diclofop-methyl
0.1
40
Pendimethalin
0.05
41
Metasulfuron-methyl
0.1
42
Methabenzthiazuron
0.5
43
Triallate
0.05
44
Fenoxy-prop-p-ethyl
0.02
45
Clodinafop-propanyl
0.1
46
Triademelon
0.5
47
Isoproturon
0.1
39
Poisonous Metals: Following limits are prescribed for poisonous metals

Name of the
parts per million
Poisonous metal
by weight
Lead
2.5
Copper
30.0
Arsenic
1.1
Tin
250.0
Zinc
50.0
Cadmiun
1.5
Mercury
1.0
Methyl Mercury
0.25
(Calculated as the element)

Uric Acid : Not more than 100 mg. per kg.
Aflatoxin : Not more than 30 micrograms per kg.
Deoxynivalenon (DON) : Not more than 1000 micrograms per kg.
Standards for Grading
GRADING - Grading provides description of the quality of the consignment and
assists in the formation of a legally binding agreement. It facilitates proper
marketing of agricultural commodities. It also ensures that agricultural commodities
move through the market faster and without obstructions. This also facilitates
transactions without physical verification by the distant buyers.
HYGIENE - Wheat and Durum wheat, after cleaning and sorting, and before further
processing:

Shall be free from microorganisms in amounts which may represent a hazard

to health.
Shall be free from parasites which may represent a hazard to health.
Shall not contain any substance originating from microorganisms, including

fungi, in amounts which may represent a hazard to health.
Contributed by Shri Murali Mohan
40
10.
Code of Storage Practices for Agriculture Produce
It has been necessitated to search for good practices of storage once green revolution
brought many fold increase in agricultural production and marketable surplus. The
agricultural production seasonality and the dynamics of the consumption process
should be considered to have efficient storage procedures for preventing or at least
minimizing loss from Receipts to liquidation. Several factors should be taken into
account to justify these serious problems that interfere in the expected results for a
good storage practice.
Among them we can point out the cares to be taken with the storage facilities
structures, with the grain processing operations and fundamentally, the continuously
and systematically personnel recycling. The stored grains should be assumed as raw
material and not only as a commodity. Therefore, the agricultural product storage
should be incorporated in the agricultural production chain concept which implies in
adopting control and safety procedures in order to obtain/ procure product with
quality, mainly to serve the food industries demand and also for consumer needs .
Analysis accomplished among important grain storage facilities, differentiated by
type, capacity and management, it could be assure that the majority of the facilities
(bulk or in bags), the Hazard Analysis and Critical Control Point HAPPCC concept
was not observed and the majority of them did not know about it.The diffusion and
the implementation of the HAPPC concept, an example practiced in food industries,
it will guarantee the minimization of the losses and also to obtain the cost reduction
41
of the final product, high quality and safe products. The grain storage chain is an
essential element for incrementing the agricultural production which is composed by
facilities designated for receiving the grain production, to preserve them in perfect
technical conditions and to redistribute them later.
Contributed by Shri Murali Mohan
42
11.
Introduction to Administration / Office Procedure and

Fundamental Accounting
Administration

Administration, also referred to as business administration, is the

management of an office, business, or organisation.
The procedures involved are:

o
Efficient organisation of people, information, and other resources to

achieve organisational objectives.
Establishing consistency, accountability, integrity.
Administrative Policies And Procedures

General Conduct Rules:

Professional Standards of Conduct

This is to set forth the basic principles by which employees shall abide and
that collectively serve to support the mission of the organisation
Confidentiality
This is to establish procedures which ensure that information accessed by
employees should always be confidential for health of organisation in view
of existing competition
Gifts and Favours

No employee of the organisation shall accept or permit any member of
his/her family or any other person acting as on his/her behalf to accept any
gift or favour.
Nonpartisan and Non-Discriminatory

Race, Color, Religion, Gender, Marital status, Age, National origin,
Ancestry, Physical or Mental disability, Veterans status, or Citizenship
status will not be considered in any employment decision or service provided
by the organisation
Conduct and Misconduct
Every employee of the organisation should maintain absolute

integrity, devotion to duty and do nothing which is unbecoming of a
public servant.
43
The following acts shall be treated as misconduct:Theft, Fraud,

Taking or giving Bribes, Willful insubordination or disobedience,
Absence without leave, Neglect of work, Damage to property,
Drunkenness, Gambling, Smoking, etc.
Employee Accountability

Work Schedule and Availability

An Employee should adhere to assigned work schedule and is expected to
extend his/her working hours to complete or improve the quality of work.
Time and Attendance

An employee should always attend on time and maintain regular and reliable
attendance.
Professional Development and Education

In all organizations programs of professional development and education are
designed to improve quality through enhanced efficiency and effectiveness
of employees, to build and retain a workforce of skilled professionals, and to
ensure currency and relevancy of practices.
Evaluations
Organisation Management always evaluates employees on their day to day
performance and record their assessments in confidential reports which are
considered for their growth (promotion or demotion).
Administrative Job Description

Routine Daily Duties:

Carrying administrative duties such as filing, typing, copying, binding,

scanning etc.
Organising travel arrangements for senior managers.
Writing letters and emails on behalf of other office staff.
Booking conference calls, rooms, taxis, couriers, hotels etc.
Processing expenses sheets and invoices.
Monitoring stationary levels and ordering office supplies.
Covering the reception desk when required.
Maintaining computer and manual filing systems.
Provide information to internal colleagues or external enquirers.

44
Handling sensitive information in a confidential manner.
Taking accurate minutes of meetings.
Coordinating office procedures.
Replying to email, telephone or face to face enquiries.
Develop and update administrative systems to make them more efficient.
Resolve administrative problems.
Receiving, sorting and distributing the post.
Answering telephone calls and passing them on.
Managing staff appointments.
Oversee and supervise the work of junior staff.
Maintain up-to-date employee holiday records.
Coordinating repairs to office equipment.
Greeting and assisting visitors to the office.
Photocopying and printing out documents on behalf of other colleagues.
Key Skills Required:

Knowledge of office administration procedures.
Managing multiple and changing priorities at once.
Diary Management
Good computer skills including Word, Excel, MS Outlook, PowerPoint.
Good typing and keyboard skills.
Managing administrative processes.
A good level of English spelling and grammar.
Attention to detail and high level of accuracy.
The personal skills that are required for the job:
Ability to multi-task.
Good telephone answering skills.
Ability to work as part of a team.
High level of discretion and judgment.
Not getting bored easily.
Having a lot of patience.
45
Traits of a Successful Administrative Professional

Defining the Work Ethic

Work ethic is a belief in work as a moral good. A person with a positive
work ethic feels good about his or her job and performs it well.
Handling Project Coordination

Employee should be able to multitask, keep track of different details which
will increase value as well as confidence.
Seeking Feedback
Feedback is positive and negative information employee receives from
people about how he/she is performing. This gives an opportunity to improve
by making necessary adjustments and succeed.
Using Your Time Wisely

Time is an organizations most valuable commodity so employee must
manage time wisely. Proper time management begins with arriving for work
on time, all the time. It means keeping to your scheduled lunch and break
times and not taking longer than what company policy dictates.
Taking Pride in Your Work

If employee takes pride in his/her work, others will think of him/her in a
positive way. Theyll increase their confidence in him/her and give
additional kinds of challenging projects.
Being Cooperative
Employee's job will be more pleasant and rewarding if he/she knows how to
get along with others. Employee should be considerate towards others
feelings, be a good listener.
Fundamental Accounting
The main fundamental accounting procedures in a warehouse are Stock Accounting
and Storage Income and Expenditure.
Stock Accounting

Once vehicles carrying stocks arrive, this will be recorded in gate point
account register.
46
Stocks will be unloaded from vehicles at decided godown point and entries
will be made in associated point register of the godown before acceptance by
the competent authority.
Once stocks are accepted they will be taken into godown and stacked
appropriately.
Entries will be made in following:

o
Stack card.
Stack wise Register.
Stock Register.
Depositor's Ledger.
Fortnightly Technical Inspection Register.
Storage loss and gain Register.
Once stocks are delivered, appropriate entries are made in all the above
registers.
Storage Income and Expenditure:

In a warehouse main source of income is from charges realised on storage of

different commodities depending upon their nature.
The charges are payable on monthly and weekly basis.
For any part of the week the charges are payable for full week.
Expenditure is involved in maintenance of infrastructure of warehouse,

prophylactic and curative treatments given to the stocks during their storage.
Expenditure is also contributed by staff salaries and labor charges for

cleaning for warehouses regularly.
Expenditure is also incurred for handling and transportation of stocks if

necessary.
Contributed by Shri TVSRVP Murthy
47
12.
Control of Storage Losses
Loss is one of the determining factors for assessing the performance of any
organization or unit. Preventive loss measures is a challenging job especially in
warehousing as the obstacles confronted are not only insects, rodents and human but
also from nature. Providing timely treatments to control insect activity, constructing
rodent proof storage structures, restricting the entry of birds / monkeys by erecting
grill doors, provisions for good ventilation / aeration, maintaining controlled
temperatures, proper accounting / auditing and installation of weighbridges for
accuracy of weighment both at the time of receipts / issues and most importantly
quality control while receiving and quality assurance at the time of dispatch / issue
are some key factors which play a pivotal role in sustaining losses.Depending on the
type of commodity to be stored, planning must be drawn to restrict the extent losses
to optimum low by planning phase wise liquidation.
It is important to understand the principles of sampling and measurement. Only then
may the procedures defined here be adapted to suit local conditions, with reasonable
confidence that measurements will be valid.
Some Definitions
Post-harvest - The period between maturity of the crop and the time of its final
consumption.
Food loss - Any change in the availability, edibility, wholesomeness or quality of
food that reduces its value to humans.
Direct loss - Loss by spillage or consumption by insects, rodents and birds.
Indirect loss - Loss caused by a lowering of quality leading to rejection as food.
This type of loss may be locally defined and related to custom.
Losses of crop product - Crop products may be lost from the food chain at any or all
of the periods between planting and preparation for immediate consumption. Three
general periods have been identified.
(a)
Pre-harvest losses occur before the harvesting process begins and may be
due to such factors as insects, weeds or diseases affecting the crop.
(b)
Harvest losses occur during the harvesting process and may be due, for
example, to shattering and shedding of the grain from the ears to the ground.
48
(c)
Post-harvest losses occur during the post-harvest period.
Post-production losses - Losses consisting of the combined harvest losses and postharvest losses.
It is always difficult to distinguish clearly between the arbitrarily defined stages
from production to consumption. The maturing/drying/processing periods will often
overlap during the post-harvest period, as, for example, in the fielddrying of maize
after it has reached maturity. There is nothing to be gained by defining rigid
boundaries and making artificial distinctions between overlapping stages. It is
preferable to relate losses to a process or operation rather than to a definite period.
Food - Those commodities which people normally eat, the weight of wholesome
edible material, measured on a moisture-free basis, that would normally be
consumed by humans. Inedible portions of the crop, such as stalks, hulls and leaves,
are not food. Crops for consumption by animals are not considered food. Postharvest loss assessments are generally made on the basis of dry-matter changes.
Normally, no attention is paid to nutritional or financial losses.
Grain loss - The loss in weight, occurring over a specified period and expressed on a
moisture-free basis, of grain which would otherwise have been available as human
food.
Moisture content (mc) - The quantity of free water in a specified material. Materials
of organic origin are defined for scientific purposes as consisting of dry matter and
water. Loss of moisture during drying is not a food loss. Moisture content is
expressed either as a decimal ratio or as a percentage in one of following ways.
(a)
Wet basis (wb). The moisture content is defined as the ratio of the weight of
water to the total weight of dry matter and water. This is the most commonly
used method in agriculture.
(b)
Dry basis (db). The moisture content is defined as a ratio of the weight of
water to the dry-matter weight. This method is normally used in scientific
laboratory work.
49
In agriculture it is traditional to use wet-basis moisture contents. Where moisture

contents are expressed without an indication of wb or db, it may be assumed that the
moisture contents are on a wet basis.
Decimal numerical values may be transformed from one basis to the other by the
following relationships:
It should be noted that the values given by these formulas differ for the same
sample.
Storage
Farmers produce crops. Some of these require some processing before becoming
suitable as food for humans. Crop products become available during different short
periods of the year, but people wish to consume the food steadily throughout the
year. Some form of storage is therefore required.
The storage requirements of crops show wide variation. For durables, such as cereal
grains, the requirements are comparatively simple; while for perishable crops, such
as fruit or vegetables, the cost of providing long-term storage is very high. Such
difficulties may be overcome either by lengthening the production season of the
perishables, or by partially or completely processing them into a more concentrated
form.
Traditional storage structures - The structures used for storage in smaller
quantities
Modern storage structures
Storage requirements
The crop product must be stored so that:
(a)
the quality does not deteriorate during the storage period;
(b)
the quantity in storage is not unintentionally reduced;

50
(c)
it is secure against pests, diseases and physical loss; and
(d)
it is accessible at the time and in the quantity required.
The main crop products which may require storage facilities are:

durables (cereal grains)
perishables (fruits and vegetables)
semi-durables (roots and tubers)
Some processing may be necessary for the perishable products. Special care and
specialized structures may be necessary for semi-durables, such as yams and sweet
potatoes, before they can be stored successfully. The cost of processing and the cost
of storage are important considerations in planning storage strategy.
Durable crop products are relatively easy to store, compared with the other two
categories.
Agents causing deterioration of stored produce
The main agents causing deterioration of stored produce are:

microorganisms (fungi, bacteria and yeasts)
insects and mites
rodents
birds
metabolic activity
Fungi - The most important type of microorganism causing or supporting crop

deterioration. Although belonging to the plant kingdom, fungi possess no
chlorophyll and are therefore unable to manufacture their own food by
photosynthesis. Thus, they live on other living bodies as parasites; or on inactively
alive or dead bodies as saprophytes. Parasitic fungi may cause diseases in the host
body, while saprophytic fungi degrade or destroy the body on which they feed.
Saprophytic fungi are more important in relation to stored durable crops.
Bacteria - Not generally a problem with dry-stored durables. They may, however,
invade already damaged portions of the crop product during storage, and multiply.
51
Insects - Many species of insect are found in stored crop products, but only a few
cause damage and loss. Some may even be beneficial because they attack other
insect pests. It is important to be able to identify accurately the main insect species
in order to assess their effect on the stored product and to devise the necessary
control measures.
Insect pests
Rodents - Rodents prefer not to live in grain stores because there is no drinking
water. Although they can subsist without freely available water, the climate in the
store is too dry for them to multiply rapidly unless they can leave the store to find
water and return easily. Rodents consume grains and damage sacks and building
structures, but they contaminate much greater quantities of grains with urine and
droppings than they consume. They are controlled by poisoning and by preventing
their access to the stored commodities.
Birds - Like rodents, birds consume some grain but also contaminate a greater
quantity with their droppings. Losses caused by birds are avoided by preventing
their access to the stored commodities.
Metabolic activity - The crop product is living material, and its normal chemical
reactions produce heat and chemical by-products. Heat is also generated by insects,
mites and microorganisms which, if present in large numbers, may lead to a
significant rise in the temperature of the stored product.
Controlling the agents causing deterioration
The agents causing deterioration (with the exception of a few anaerobic species)
require moisture, oxygen and an equable temperature in order to multiply and
thereby damage the product.
Such agents are controlled by keeping one or more of these factors at levels which
prevent (or at least deter) their growth or by measures such as the application of
insecticides, or fungicides (e.g. propionic acid).
52
Metabolic activity
Reduction of moisture content - The rate of metabolic activity is significantly
reduced in most cereals if the grain moisture content is reduced to 14 percent; below
8 percent, metabolic activity practically ceases. Drying is therefore a standard
treatment for wet cereal crops before storage. Drying requires energy to evaporate
the moisture, and air movement to remove the resultant water vapour. The energy
may be derived from burning fossil fuel or wood, or from solar energy, as in sundrying. It may also be derived from ambient air that is not fully saturated with
vapour (as in the crib drying of ear maize). Air movement may arise through
convection currents caused by very small temperature differences, by a general air
movement such as wind or a breeze, or by artificial means such as a fan. Drying
processes are well documented and results can be reliably predicted.
Reducing oxygen - Bulk grain may be stored in airtight containers to exclude
oxygen. If the grain is wet (17-20 percent me), metabolic activity soon exhausts the
initial oxygen supply and the grain will not deteriorate in feeding quality. The germ,
however, is destroyed and anaerobic fermentation may lead to unacceptable taints.
Such grain is only used for animal feeding. If the grain is dry (12-13 percent me), it
may be stored for several years, with careful management. In controlled (modified)atmosphere storage, nitrogen or carbon dioxide is often used to replace the original
air when the container is first loaded.
Controlling temperature - Levels of insect activity and general metabolic activity
rise with increasing temperatures up to 42C. The maintenance of low temperatures
in the bulk grain mass by using modern refrigeration techniques has been used
successfully to control deterioration and maintain viability of the stored grain. The
method is used in specialized fields such as seed storage and storage of grain for
brewing. Equipment and running costs are high.
Chemical control - The bulk grain is treated with an organic acid or with gaseous
ammonia. This sterilizes the grain and kills the germ, and generally leaves an odour
disagreeable to humans in the grain, which is then used for stock feed. Insecticide
and fumigant treatments may also be considered as chemical control methods
Contributed by Shri M Srinivasulu
53
13.
Food Safety Regulatory Compliance in India
Institutional Structures of Food Safety in India: Bridging the Gap

The Indian Food safety System vis--vis International Objective of Food Safety
Safety is not defined as a situation with total absence of hazards. According to the
Food and Agricultural Organisation of the UN and World Health Organisations,
food safety refers to all those hazards, whether chronic or acute, that may make food
injurious to the health of the consumer (FAO/WHO, 2002). The food industries in
several nations are adopting the international concept of Food Safety Objective
(FSO) 1 to manage food risks hazards. They are coming to realization that the entire
food chain of production and distribution holds the responsibility to supply safe and
healthy food. For this, efforts are put to harmonize food control legislation between
countries to ensure that consumers are assured a certain quality and level of safety
wherever that food is produced in the process of globalization of the foodsupply
(Davies, 2001).
In line with it India too is in the process of strengthening food safety control
programmes for its exportable food items, but these changes are in an early stage of
evolution for the produce domestically marketed. The food quality for the export
market varies from the food marketed in the local market. As regards the
effectiveness of food control in India, it appears to be severely undermined by the
existence of multiple jurisdictions, and weaknesses in surveillance, monitoring and
enforcement. The list of food legislations 2 is notable for achieving food safety and
consumers protection but their enforcement is poor. These laws are enacted under
different ministries having their own rules and orders that often create a perplexing
and sometime contradictory environment for the food sector 3. In second quarter of
The concept allows for the application of the principles of Good Hygienic Practice (GHP), Hazard
Analysis Critical Control Point (HACCP) systems, Good Agricultural Practice (GAP) performance
criteria, process/product criteria and/or acceptance criteria and other protocols introduced by Codex
Alimentarius and International Standard Organisation (ISO). See FAO/WHO Report, 2002 and Cole,
2003 for concept; See Alberni et al. 2008; Raspor, 2008; and Wallace in Mayes and Mortimore (ed),
2001 for application.
2
Good overview on the main Indian Acts and statutory orders to regulate food trade in India is
available in Acharya and Agarwal 2010, p.316-317, p.337-345
3
See Report of the Taskforce on Integrated Food Laws, FICCI 2002
54
2006, the latest Act, the Food Safety and Standards Act 4, 2006 (No. 34 of 2006),
under the Ministry of Health and Family Welfare integrates the existing eight of the
food laws. It brings about one statute under a single apex regulatory authority known
as Food Safety and Standards Authority of India (FSSAI) with minor revisions,
while adding key provisions to further strengthen food safety regulation. The Central
Government notifies Food Safety and Standards Rules, 2011 on May 5, 2011. The
enacting of the new legislation is suggestive of intent for progressive change in
Indian food regulatory system. The Act is based on international legislations,
instrumentalities and Codex Alimentarius Commission. It is divided in 12 chapters
containing 101 sections and two schedules that provide key provisions to improve
food safety in primary food from production to consumption.
Implementation for Food Safety in Agricultural Produce: Present Indian
Scenario
With so much effort so far, the problem is that even if the Indian Governments and
legislative body have laid down legal standards, there has been laxity in the
implementation of the orders and instructions by the authorities concerned. The
Prime Minister of India initiated the process of the new Act in 2002 by constituting
the task force to review Indias food and agro industries management policy. For
time needed before the new Food Safety and Standards Act with rules is enforced,
existing rules and regulations under number of Acts of different Ministries continue
to be in force. The initiative was a clear spelt-out to all concerned departments that
food safety in Indian states is turning into a major problem area and mandatory
regulatory activity of enforcement by national and local authorities to provide
consumer protection and ensure overall food safety is must. But even during years of
run down to new Act, one finds number of cases relating to contamination of food
with pesticide residue, heavy metals and mycotoxins bringing a great menace to the
health and wellbeing of the community. National economic loss due to negative
impact on trade is additional burden.
In June 2010, the Union health ministry asked the state authorities to keep a strict
vigil on use of carbide gas for ripening fruits. Traders, retailers and sometimes even
4
See Palthur, Sajala, and Chitta 2010 for review of the new Act
55
growers, use unscrupulous methods to ripen fruits artificially in order to ensure a

regular supply of fruits much before their due time and get high prices for them. Use
of such chemicals is prohibited under Rule 44 AA of the Prevention of Food
Adulteration Rules, 1955. The ministry issued a circular to all state food authorities,
with the Food Safety and Standards Authority of India (FSSAI) stressing the need to
take legal action for violation of the PFA rules. The Ministry announced that sale of
any adulterated and misbranded article of food was an offence punishable with
minimum imprisonment of six months and with a fine that shall not be less than Rs.
1,000. In case adulterated food stuff causes death or grievous hurt, the offence was
punishable with imprisonment which might extend to term of life and with fine
which shall not be less than Rs. 5,000. Enforcement authorities in the states have
been informed that circumstantial evidence of presence of calcium carbide in
godowns/wooden crates/premises kept together with fruits may be evidence of
artificial ripening for the courts. The FSSAI also circulated a copy of procedure for
detection of acetylene in godowns or treatment chambers.
State of Food Market and Economic Cost of Regulatory Processes
There are fundamental shifts occurring in agro-businesses in Asia. The trend of
building partnerships and alliances is increasing. Competition is being replaced by
co-ventures leading to win-win game. It is observed that these linkages improve
efficiency in the production and marketing of food products. The benefits of
partnerships are recognized by global players. Instead of setting up an isolated topto-toe supply chain unit exploiting strengths and resources of partner organisation
leads to significant gains to those along the chain. For instance, Bharti-Wal-Mart has
set-up a joint venture to run agricultural distribution network in India. In this
venture, Bharti brings in their intimate knowledge of doing business in India,
whereas Wal-Mart brings in their expertise in strategic sourcing and efficient supply
chain management practices. The experts view it as good business model which
effectively overcome the inefficiencies of logistics infrastructure and which
supposedly benefits all the stake-holders in the supply chain, right from farmers to
the consumers (Wal-Mart 2010). Business forecast suggests that the opportunities
like the one in India are immense. The McKinsey Global Institute, a think tank,
estimates India's retail market will be worth $1.52 trillion by 2025 (Robinson, 2007).
56
But, on the contrary it is also argued that building a modern, efficient network is not
enough to reap the estimated gains but adapting it to Indian conditions is where a
challenge lies. At present, India has one of the most fragmented produce-supply
chains amongst the countries, resulting in big mark-ups and poor quality. The
difficult part is regular supplying food-stores with fresh, clean and safe vegetables
and fruit through a sophisticated supply chain that links farms and consumers,
country and cities. Moreover, a report by the Confederation of Indian Industry (CII)
and Amarthi Consulting summarises that $65 billion is lost each year on account of
the inefficient supply chain infrastructure in India. The report highlights that supply
chain costs in India are as much as 13 percent of GDP as compared to 7 percent in
developed countries. The lack of an integrated cold chain infrastructure means that
farm produce worth $13 billion is wasted each year. It warns that if the present
challenges in Indias supply-chain system are not addressed, then the sectors
growth could get hampered (Economic Times, 2010). With increased public
awareness about food safety, internationally consumers want to know source of food
production and demand assurance that it is safe. Without immediate action for safe
food, chain of supermarket would prefer to procure more of imported fruits and
vegetables from neighbouring countries than procuring the supply from the local
market. It is known fact South East Asian region (Thailand, Vietnam, Malaysia,
Philippines, Indonesia, China) are advancing well in agri-food chains and they are
supplying perishable food products around the world at fairly competitive prices.
The Indian states whose economy is dependent on tourism and services also need to
be extra cautious on availability of food safety because cases of food hazard in the
country not only can damage trade but also tourism prospects can be marred leading
to loss of earnings, unemployment and litigation.
Warehousing (Development and Regulation) Act, 2007 No. 37 of 2007 [19th
September, 2007.] :An Act to make provisions for the development and regulation of
warehouses, negotiability of warehouse receipts, establishment of a Warehousing.
Development and Regulatory Authority and for matters connected therewith or
incidental thereto.
The National Food Security Act, 2013 (also Right to Food Act) is an Act of the
Parliament of India which aims to provide subsidized food grains to approximately
57
two thirds of India's 1.2 billion people.[1] It was signed into law on 12 September
2013, retroactive to 5 July 2013.[2][3]
It ensures the PDS will reach about two-thirds of the population (75% in rural areas
and 50% in urban areas). Under the provisions of the bill, beneficiaries of the Public
Distribution System (or, PDS) are entitled to 5 kilograms (11 lb) per person per
month of cereals at the following prices:
3 per kg
Rice at
Wheat at
Coarse grains (millet) at
2 per kg
1per kg.
*Pregnant women, lactating mothers, and certain categories of children are eligible
for daily free meals.
The bill has been highly controversial. It was introduced into India's parliament on
22 December 2011, promulgated as a presidential ordinance on 5 July 2013, and
enacted into law on 12 September 2013.
Food Safety and Standards Act, 2006 No. 34 OF 2006 [23rdAugust, 2006]
An Act to consolidate the laws relating to food and to establish the Food Safety
andStandards Authority of India for laying down science based standards for articles
of food andto regulate their manufacture, storage, distribution, sale and import, to
ensure availability ofsafe and wholesome food for human consumption and for
matters connected therewith orincidental thereto. Replacing the PFA Act 1955.
Essential Commodities Act, 1955

To control the market price of any essential commodity
To regulate by licenses production of any essential commodity
To regulate by licenses storage, transport, distribution, disposal, acquisition,

use or consumption of any essential commodity
To regulate inter or intra-state movement of foodgrains
To prescribe conditions under which trading of foodgrains could be carried

out and other regulatory measures
Contributed by Dr M S Jairath
58
14. Stack Planning

Stack planning shall be done according to the floor area. Recommended standard
size of stacks is given below. Warehouse can choose to have different size
depending upon span of Warehouse for optimum space utilization:
i.
9.144 m x 6.090 m
ii.
6.400 m x 6.486 m
iii.
5.486 m x 5.486 m
iv.
3.657 m x 5.486 m
Stack plan shall be prepared in such a manner that the stacks shall not obstruct light
and free flow of air into godowns.
A minimum of 0.75 m wide space between stacks, 0.6 m between wall and stack and
1.20 m between door points as haulage alleyway shall be provided for operational
purpose.
Stacking
a)
Stacking of commodities in bags / containers / packages shall be done in the

identified stacks on a suitable available dunnage (Bamboo mats / Polythene
film / wooden pallets/poly pallets, etc.)
b)
Stacks shall be built in straight line uniformly within the stack area
earmarked by stack lines.
c)
Stack Card with necessary entries shall be provided on every stack on

haulage alleyways side.
Stack Lines
a)
Each stack shall be identified by drawing a stack line on the floor of the
godown as per stack plan.
b)
Preferable width of stack line is 5 cms
c)
Colour of stack line shall be Yellow or White
d)
Stack line shall be drawn on all four sides to full length
e)
Each stack shall be given stack number neatly painted on the floor/ wall /
pillar in front of each stack.
59
Recommended Type of Stacks, Dunnage & Special Treatment before

Acceptance
a) Block Stacking: For goods, where part withdrawal is expected, block stacking
shall be used. In block stacking, each layer has tiers of lengthwise and breadth wise
bags alternating to form the block. In any two adjacent layers this system of
lengthwise and breadth wise will be reversed.
b) Criss Cross Stacking: For long storage goods, criss cross stacking is
recommended. In this process, bags are laid in complete lengthwise or breadth wise
tiers in alternate layers (Preferred for single commodity to be kept under long
storage)
Stacking of goods shall be done on floors having proper dunnage. Proper dunnage
implies prevention of moisture seepage to goods from floor and protection that
leakage / spillage from goods do not spoil flooring. These can be Wooden Crates,
Polythene Film sandwiched between two layers of mats, metal trays in case of oils.
Immediate curative treatments shall be done, in case the goods with infestation are
accepted. Such goods shall be stored in isolation shed so that the infestation may not
spread. Records of such treatment shall be maintained in special conditions of
Deposit Application (WDRAWMS-F-04).
The height of the stack shall be decided on the basis of goods, size, weight, shape,
strength of the packing to stand the height of the stack. Goods wise maximum
stacking height is mentioned below:
Sr. No Commodity
Maximum Stack Height up to

In layers
In Meters
1.
Wheat
18
4.6
2.
Barley
18
4.6
3.
Paddy
18
4.6
4.
Jowar
18
4.6
5.
Whole Pulse
16
4.2
6.
Maize
16
4.2
7.
Rice
16
4.3
60
8.
Milled Pulses
12
3.0
9.
Oil tins (4 gallons tin)
4-3.0
10.
Oil drums
2.1
11.
Fertilizer
24
3.7
15
3.7-4.3
(all categories 50 Kg packing wise)

12.
Oil seeds & Oil cakes

(except groundnut kernels)
13.
Groundnut Kernels
12
3-3.7
14.
Cashew kernels
12
3-3.7
15.
Sugar
12
3-37
16.
Coffee pods
14
3.7 4.3
17.
Cotton bales
3-4
3.0-3.7
18.
Chilles in bags
3-4
2.4-3.0
19.
Chilles in docras
10-12
3.0
20.
Jaggery lumps 8 kattas
8 Kattas
1.8
21.
Tamarind 4 kattas
4 Kattas
1.5
22.
Wheat Atta
12
3.0
23
Chillies in Bags
3-4
2.4-3.0
24
Rice Bran (In Dry Condition)
12-14
3.0-3.7
25.
Wheat Bran
18
4.6
26.
Sooji
12
3.0
27.
Maida
12
3.0
28.
Beasan
12
3.0
29.
Cumin Seed
15
4.0 4.3
30.
Arecanut
15
3.7 4.3
31.
Cashewnut Pods
14
3.7 4.3
32.
Coir Varn
Subject to Packing
3.7
Contributed by Dr M S Jairath
61
15.
Negotiable Warehouse Receipts and Pledge Finance
Credit is important for the present time technology-intensive agriculture. The

availability of credit can help in enhancing the use of inputs (Mishra, 1994), and
adoption of modern technologies (Rajeev and Dev, 1998), cultivation of
remunerative crops, and increasing cropping intensity (Rajendra et al., 1995),
improving net returns per unit area and generating more capital stock at farms (Baba
et al., 2014). Innovations in agricultural credit for its significance in agricultural
economy have gained importance over the years (Shraddha, 2013). The initiatives
like nationalization of commercial bank, setting up of Regional Rural Banks and
many other policy interventions like priority sector lending have resulted in
increased flow of institutional credit to agriculture over the years. The structure of
flow of formal credit to agriculture has also changed over the years, from the
cooperatives during 1950s and 1960s to scheduled commercial banks and RRBs as
the major sources of direct and indirect institutional credit to agriculture in recent
years (Thejeswini et al., 2014).
The development of efficient, sustainable and widely accessible rural financial
systems remains a major challenge for factors like high cost of delivering financial
services to small and widely disbursed customers and lack of suitable collateral.
Only 21 per cent rural households had access to formal credit and the majority of
bank loans were collateralized (RBI, 2005). The warehouse receipt system (WRS)
has the potential not only to improve the access of farming community to
institutional credit but also to work as trade facilitator and thus helping in improving
the per capita household income through efficient marketing of the agricultural
commodity. Negotiable Warehouse Receipt (NWR) will help in developing an
effective tool to take care of short-term post-production credit needs of the farming
community. Availability of short-term credit to farmers will provide a real boost to
the increase in flow of formal credit. The importance of short-term credit has been
reflected by the refinance figures of NABARD for the year 2014-15 which reveal
that nearly 75 per cent of the total refinance is for short-term component (NABARD,
2014-15).
62
In spite of the requirement of credit by producer-farmers and government efforts to

promote the use of negotiable warehouse receipt by creating storage infrastructure in
the rural area, providing appropriate legal and regulatory environment and initiating
various schemes to popularize pledge finance among farmers, the progress in taking
loans against NWR has been very slow and confined to a limited geographical area.
Making credit available to the farmers mainly in the agricultural ecosystem
dominated by smallholders, has always been a challenge. The lack of appropriate
assets to offer as security has further aggravated the situation. The warehouse receipt
system has the potential to offer a viable channel to deliver credit to smallholder
farmers as it allows the use of stocks as collateral against loan. The same has been
the intension of the government behind creation of storage capacity in the country.
Warehouse receipt is the instrument that allows the farmers to extend the sales
period of modestly perishable products well beyond the harvesting season. The
warehouse receipt can be used as collateral for short-term borrowing to obtain
working capital. Collateralizing agricultural inventories will lead to an increase in
the availability of credit, reduce its cost, and mobilize external financial resources
for the sector. The process of warehousing sector and associated benefits are limited
in many developing countries because of institutional and structural shortcomings
like lack of incentives for the development of private storage industry owing to
government intervention in agricultural sector and lack of proper legal, regulatory,
and institutional environment to support a system of Warehouse Receipts (RBI,
2005).
The banks are the major players in fulfilling the objectives of the Government of
India as they have to provide pledge loan to farmers against the agricultural produce
stored in the warehouses. Despite continuous efforts by the government, the pledge
loan against warehouse receipt has not become popular in India as the bankers are
not confident with the management and maintenance of the warehouses in the
country (RBI, 2005). With the aim to regulate and promote the growth of
warehousing sector in India and also to introduce the negotiability of warehouse
receipts, the Warehousing (Development and Regulation) Act 2007 was enacted in
October, 2010 by the Government of India.
63
Growth and Spread of Pledge Finance

Pledge finance in general is bailment of goods as a security for payment of a debt. In
the Indian agricultural scenario, pledge finance has immense importance as most of
the small and marginal farmers are resource-poor and lack collaterals to offer as
security to the financial institutions for availing loan. The NWRs can be used as
collateral. In many Indian states, pledge finance has been introduced in recent past
(by pledging stored farm produce).
Among the 28 Indian states, only 12 have availed the benefits of pledge finance
scheme for farmers and other stakeholders dealing in agricultural commodities. In
these states, the scheme has been popularized by agencies such as Central
Warehousing Corporation (CWC), State Warehousing Corporation (SWC), State
Agricultural Marketing Departments/ Boards, collateral management service
provider, i.e. National Collateral Management Service Limited and National Bulk
Handling Corporation (NBHC). Some of the states like Punjab, Andhra Pradesh,
Rajasthan and Haryana, have achieved reasonable progress.
Status of pledge finance in India, 2013-14
Pledge Finance
(in Crore )
2915
Per cent share
No. of beneficiaries
37.97
358
Andhra Pradesh
1314
17.12
19813
Rajasthan
1169
15.22
612
Haryana
974
12.69
265
Karnataka
450
5.87
13107
Madhya Pradesh
312
4.06
895
Tamil Nadu
241
3.14
5765
Odisha
109
1.42
206
West Bengal
76
0.99
81
Kerala
57
0.74
1516
Maharashtra
39
0.51
390
Gujarat
21
0.27
62
7675
100.00
43070
State
Punjab
Total
Source: GoI (2014)
64
An analysis of share of different agencies in pledge finance and the number of

beneficiaries, reveals that the major share of pledge finance is being managed by the
agencies providing collateral management services like National Collateral
Management Service Limited (NCML) and National Bulk Handling Corporation
(NBHC). However, state level agencies like State Warehousing Corporation (SWC),
Central Warehousing Corporation (CWC) and State Agricultural Marketing
Board/Agricultural Produce Market Committees (APMCs) are found to be better
equipped for extending benefit to a larger number of beneficiaries. The figure of
average loan per beneficiary also suggests that the loan disbursed through collateral
agencies is being availed mainly by the traders.
Share of different agencies in total pledge finance disbursed and number of
beneficiaries, 2013-14
50
42.4
42.6
35.7
36.7
40
30
20
1.7
10
12.7
9.3
8.6
5.6
0.8
NBHC
NCML
Share of finance
SWC
CWC
APMC
Percentage of beneficiaries
The loan disbursed through State and Central Warehousing Corporations might have
gone to the farming community, but mainly to large or medium farmers as suggested
by the size of average loan disbursed per farmer. The loan disbursed through
APMCs has been found to be most suitable for small and marginal farmers as
suggested by the size of loan per beneficiary.
65
Average loan disbursed per beneficiary by different agencies
Loan (in lakh )
148.08
21.19
NBHC
NCML
17.82
4.20
3.20
1.06
SWC
CWC
APMC
Total
The agencies integrated with the market have proved to be a better window for
disbursement of pledge finance like the collateral management service providers.
The collateral management service agencies for their business structure seem to be
giving preference to traders over farmers. Marketing facilitating public agencies like
APMC seem to be more focused on distributing loans to smallholder farmers.
Conclusion
The finance against NWR is related not only to warehousing and banking but also to
the market. The facility of loan against the stored produce is being utilized mainly
by the traders as reflected by the higher number of applications received by the
Banks from traders. It may be an outcome of limited use of warehouse facility by the
farming community. In order to inculcate storage habit and promote storage among
the producers, warehousing should be encouraged under public-private partnership
mode. All the leading banks do offer loans against NWR though it is skewed
towards traders with wide variations in the percentage of loan disbursed against the
market value of the commodity stored. There is a strong need to push NWR beyond
a negotiable instrument as it offers immense potential to trade, short-term loan to
farmers, balanced supply of agri-commodities and enhances farmers returns.
Contributed by Dr M S Jairath and Dr Shalendra
66
16.
Forward and Futures Market
The functioning of futures market consists of three important steps. They are
trading, clearing and settlement.
Trading (a) The various aspects in trading are:
a) Placing the order
b) Methods of trading
c) Kinds of orders
d) Kinds of margins
e) Pricing of futures
f) Closing out the positions
a)
Placing the order
In futures market an order should contains specifications such as buy or sell, the
number of contracts, the month of contract, type and quality of the commodity, the
exchange, the price specification and the period of validity. Usually, orders are
placed, by telephone, with brokers representing users and producers. If an order is
executed the client receives a confirmation. The investor who agrees to buy assumes
a long futures position and the investor who agrees to sell assumes a short futures
position.
b)
Methods of Trading
The trading in futures exchanges is carried out through two methods. They are
i)
Open outcry
ii)
Electronic trading
Open Outcry: Open outcry trading is a face-to-face and highly activated form of
trading used on the floors of the exchanges. In open outcry system the futures
contracts are traded in pits. A pit is a raised platform in octagonal shape with
descending steps on the inside that permit buyers and sellers to see each other.
Normally only one type of contract is traded in each pit like a Eurodollar pit, Live
Cattle pit etc.
67
Each side of the octagon forms a pie slice in the pit. All the traders dealing with a
certain delivery month trade in the same slice. The brokers, who work for
institutions or the general public stand on the edges of the pit so that they can easily
see other traders and have easy access to their runners who bring orders.
The trading process consists of an auction in which all bids and offers on each of the
contracts are made known to the public and everyone can see the markets best
price. To place an order under this method, the customer calls a broker, who timestamps the order and prepares an office order ticket. The broker then sends the order
to a booth on the exchange floor called brokers floor booth. There, a floor order
ticket is prepared, and a clerk hand delivers the order to the floor trader for
execution. In some cases, the floor clerk may use hand signals to convey the order to
floor traders. Large orders typically go directly from the customer to the brokers
floor booth. The floor trader, standing in a central location i.e. trading pit, negotiates
a price by shouting out the order to other floor traders, who bid on the order using
hand signals. Once filled, the order is recorded manually by both parties in the trade.
At the end of each day, the clearing house settles trades by ensuring that no
discrepancy exists in the matched-trade information.
Electronic Trading: Electronic trading systems have become increasingly popular
in the past decade. The driving factor for the rise in the popularity of these systems
is their potential to improve efficiency and lower the cost of transactions. In
addition, electronic trading systems make exchanges available to remote investors in
real time, which is an important benefit in the present situation of increased trading
from remote locations.
Electronic trading is an automated trade execution system with three key

components
1)
Computer terminals, where customer orders are keyed in and trade

confirmations are received.
2)
A host computer that processes trade.
3)
A network that links the terminals to the host computer.
68
Customers may enter orders directly into the terminal or phone in the order to a
broker. With electronic order-matching systems, the host computer matches bids
with offers according to certain rules that determine an orders priority. Priority
rules on most systems include price and time of entry. In some cases, priority rules
may also include order size, type of order and the identity of the customer who
placed the order.
In the simplest case, matching occurs when a trader places a buy order at a price
equal to or higher than the price of an existing sell order for the same contract. The
host computer automatically executes the order, so that trades are matched
immediately. Trades are then cleared immediately, as long as the host computer is
linked to the clearing house.
After hours Electronic trading system: After-hours electronic trading first began
in 1992 at CME (Chicago Mercantile Exchange). This was introduced to meet the
needs of an increasingly integrated global economy and to have an access to the
currency price protection around the clock. Electronic trading systems are used in
the open outcry exchanges after the day trading is over.
c)
Kinds of orders
The orders (under an open outcry/ electronic system) can be placed in different
ways, including:
Market Order: This is the most common type of order. No specific price is
mentioned. Only the position to be takenlong/short is stated. When this kind
of order is placed, it gets executed irrespective of the current market price of
that particular asset.
Market on Open: The order will be executed on the market open within the
opening range. This trade is used to enter a new trade, or exit an open trade.
Market on Close: The order will be executed on the market close. The fill
price will be within the closing range, which may, in some markets, be
substantially different from the settlement price. This trade is also used to
enter a new trade, or exit an open trade.
Limit Order: An order to buy or sell a stated amount of a commodity at a

specified price, or at a better price, if obtainable at the time of execution. The
69
disadvantage is that the order may not get filled at all if the price for that day
does not reach the specified price.
Stop-Loss Order: A stop-loss order is an order, placed with the broker, to

buy or sell a particular futures contract at the market price if and when the
price reaches a specified level. Futures traders often use stop orders in an
effort to limit the amount they might lose if the futures price moves against
their position. Stop orders are not executed until the price reaches the
specified point. When the price reaches that point the stop order becomes a
market order. Most of the time, stop orders are used to exit a trade. But, stop
orders can be executed for buying/selling positions too. A buy stop order is
initiated when one wants to buy a contract or go long and a sell stop order
when one wants to sell or go short. The order gets filled at the suggested stop
order price or at a better price
Example: A trader wants to purchase a crude oil futures contract at Rs.750 per
barrel. He wishes to limit his loss to Rs.50 a barrel. A stop order would then
be placed to sell an offsetting contract if the price falls to Rs 700 per barrel.
When the market touches this price, stop order gets executed and the trader
would exit the market.
Day Order: Day orders are good for only one day, the day the order is
placed.
Example: A trader wants to go long on September 1, 2003 in Refined Palm oil in a

commodity exchange. A day order is placed at Rs.340/10 kg. If the market
does not reach this price the order does not get filled even if the market
touches Rs.341 and closes. In other words day order is for a specific price
and if the order does not get filled that day, one has to place the order again
the next day.
Good Till Cancelled (GTC) Order: It is an open order to buy or sell that
remains active until the order gets filled in the market, or is cancelled by the
person who placed the order.
Example: A trader wants to go long on Refined Palm oil when the market touches
Rs.400/10kg. The order exists until it is filled up, even if it takes months for
it to happen. The order is always open until the order is cancelled or the
contract expires.
70
Fill or Kill Order: This order is a limit order that is sent to the pit to be
executed immediately and if the order is unable to be filled immediately, it
gets canceled.
All or None Order: All or None order (AON) is a limit order, which is to be
executed in its entirety, or not at all. Unlike a fill-or-kill order, an all-or-none
order is not cancelled if it is not executed as soon as it is represented in the
exchange. An all-or-none order position can be closed out with another AON
order
Spread Order: A simple spread order involves two positions, one long and
one short. They are taken in the same commodity with different months
(calendar spread) or in closely related commodities. Prices of the two futures
contract therefore tend to go up and down together, and gains on one side of
the spread are offset by losses on the other. The spreaders goal is to profit
from a change in the difference between the two futures prices. The trader is
virtually unconcerned whether the entire price structures moves up or down,
just so long as the futures contract he bought goes up more (or down less)
than the futures contract he sold.
OCO Order: It is called One cancels the Other (OCO) order. An order placed
so as to take advantage of price movement, which consists of both a Stop and
a Limit price. Once one level is reached, one half of the order will be
executed (either Stop or Limit) and the remaining order canceled (either
Limit or Stop). This type of order would close the position if the market
moved to either the stop rate or the limit rate, thereby closing the trade and at
the same time, canceling the other entry order.
Example: A trader has a buy position at Rs.14,000/tonne on Soybean. He wishes to

have both stop and limit orders in order to fill the order in a particular price range. A
stop order is placed at Rs. 14,100/tonne and a limit order at Rs.13,900/tonne. If the
market trades at Rs.13,900/tonne, the limit order gets filled and the stop order is
immediately gets cancelled. The trader exits the market at Rs.13,900/tonne
71
d)
Kinds of Margins
Margin is the deposit money that needs to be paid to buy or sell each contract. The
margin required for a futures contract is better described as performance bond or
good faith money. The margin levels are set by the exchanges based on volatility
(market conditions) and can be changed at any time. The margin requirements for
most futures contracts range from 2% to 15% of the value of the contract.
The different types of margins in futures that a trader has to maintain are:
Initial Margin: The amount that must be deposited by a customer at the time
of entering in to a contract is called Initial margin. This margin is meant to
cover the largest potential loss in one day. The margin is a mandatory
requirement for parties who are entering into the contract.
Maintenance Margin: A trader is entitled to withdraw any balance in the

margin account in excess of the initial margin. To ensure that the balance in
the margin account never becomes negative, a maintenance margin, which is
somewhat lower than the initial margin, is set. If the balance in the margin
account falls below the maintenance margin, the trader receives a margin call
and is requested to deposit extra funds to bring it to the initial margin level
within a very short period of time. The extra funds deposited are known as a
variation margin. If the trader does not provide the variation margin, the
broker closes out the position by offsetting the contract.
Additional margin: In case of sudden higher than expected volatility, the

exchange calls for an additional margin, which is a preemptive move to
prevent breakdown. This is imposed when the exchange fears that the
markets have become too volatile and may result in some payments crisis,
etc.
Mark-to-Market Margin: At the end of each trading day, the margin account
is adjusted to reflect the traders gain or loss. This is known as marking to
market the account of each trader. All futures contracts are settled daily
reducing the credit exposure to one-days movement. Based on the
settlement price, the value of all positions is marked-to-the-market each day
after the official close. I.e. the accounts are either debited or credited based
on how well the positions faired in that days trading session. If the account
72
falls below the maintenance margin level the trader needs to replenish the
account by giving additional funds. On the other hand, if the position
generates a gain, the funds can be withdrawn (those funds above the required
initial margin) or can be used to fund additional trades.
Just as a trader is required to maintain a margin account with a broker, a

clearing house member is required to maintain a margin account with the
clearing house. This is known as clearing margin. In the case of clearing
house member, there is only an original margin and no maintenance margin.
Clearing house and clearing house margins has been discussed further in
detail under the section Clearing and Settlement
e)
Pricing of Futures
In futures contract the price is predetermined. The seller knows how much he is
going to be paid and the buyer knows how much he is going to pay at a future date.
As futures contracts are standardized according to quantity, quality and location, it is
price that is the only factor on which buyers and sellers can bargain. The price in
futures market is determined by a mechanism called Price discovery.
Price discovery
It is the process of arriving at a figure in which one person buys and another sells a
futures contract for a specific expiration date. In an active futures market, the
process of price discovery continues from the markets opening until its close. The
prices are freely and competitively derived. Future prices are therefore considered to
be superior to the administered prices or the prices that are determined privately.
Further the low transaction costs and frequent trading encourages wide participation
in futures markets lessening the opportunity for control by a few buyers and sellers.
In an active futures markets the free flow of information is vital. Futures exchanges
act as a focal point for the collection and dissemination of statistics on supplies,
transportation, storage, purchases, exports, imports, currency values, interest rates
and other pertinent information. Any significant change in this data is immediately
reflected in the trading pits as traders digest the new information and adjust their
bids and offers accordingly. As a result of this free flow of information, the market
determines the best estimate of today and tomorrows prices and it is considered to
73
be the accurate reflection of the supply and demand for the underlying commodity.
Price discovery facilitates this free flow of information, which is vital to the
effective functioning of futures market.
Clearing and Settlement
Most of the futures contracts do not lead to the actual physical delivery of the
underlying asset. The settlement is by closing out, physical delivery or cash
settlement. All these settlement functions are taken care of by an exchange-clearing
house, called clearing house/ corporation, in futures transactions.
Clearing House
A clearing house is a system by which exchanges guarantee the faithful compliance
of all trade commitments undertaken on the trading floor or electronically over the
electronic trading systems. The main task of the clearing house is to keep track of all
the transactions that take place during a day so that the net position of each of its
members can be calculated. It guarantees the performance of the parties to each
transaction. It is responsible for

Effecting timely settlement
Trade registration and follow up
Control of the evolution of open interest
Financial clearing of the payment flow
Physical settlement (by delivery) or financial settlement (by price difference)

of contracts
Administration of financial guarantees demanded by the participants.
Functions of clearing house

Clearing house has a number of members, who are mostly financialinstitutions
responsible for the clearing and settlement of commodities traded on the exchanges.
The margin accounts for the clearing house members are adjusted for gains and
losses at the end of each day (in the same way as the individual traders keep margin
accounts with the broker). In the case of clearing house members only the original
margin is required (and not maintenance margin). Everyday the account balance for
each contract must be maintained at an amount equal to the original margin times
the number of contracts outstanding. Thus depending on a days transactions and
74
price movement the members either need to add funds or can withdraw funds from
their margin accounts at the end of the day. The brokers who are not the clearing
members need to maintain a margin account with the clearing house member
through whom they trade in the clearing house.
Processes of a clearing house
(The narrative above describes the general functions of a clearing house.)
Settlement
A contract can be settled in three ways
By physical delivery of the underlying asset
Closing out by offsetting positions
Cash settlement.
Closing out
Most of the contracts are settled by closing out. In closing out, the opposite
transaction is effected to close out the original futures position. A buy contract is
closed out by a sale and a sale contract is closed out by a buy.
Cash settlement
When a contract is settled in cash it is marked to the market at the end of the last
trading day and all positions are declared closed. The settlement price on the last
trading day is set equal to the closing spot price of the underlying asset ensuring the
convergence of future prices and the spot prices.
Physical Delivery: When a contract comes to settlement, the exchange provides
alternatives like delivery place, month and quality specifications.
(a)
Trading period, Delivery date etc. are all defined as per settlement calendar
(b)
Member is bound to give Delivery information. If he fails to give

information, it is Closed out with Penalty as decided by the Exchange
(c)
Member can choose for an alternative mode of Settlement by providing

Counter party Clearing Member and Constituent. The Exchange will not be
responsible for or guarantee settlement for such deals.
(d)
Settlement Price is calculated and notified by the Exchange
75
The delivery place is very important for commodities with significant transportation
costs. The exchange also specifies the precise period (date and time) during which
the delivery can be made. For many commodities the delivery period may be an
entire month. The party in the short position (seller) gets the chance to make choices
from these alternatives. The Exchange collects delivery information. The price
paid is normally the most recent settlement price (with a possible adjustment for the
quality of the asset and the delivery location). Then the exchange selects a party
with an outstanding long position to accept delivery.
Contributed by Dr Purushottam Sharma
76
Annexures
77
Supply Chain Management
SupplySupply To provide what is needed; to furnish;

to fill the place of; act of supplying; what is
supplied; store;stocks;cargo;goods etc.
ChainChain Links connected and forming a ring or a
series; a succession of things or events.
ManagementManagement To direct; to control; to carry on;
to cope with; the act of managing;
administration.
Presented by:
P.E.PRASAD, MA, M.Sc. (UK)

Ex . General Manager, CWC
Designed by J.k
What is Supply Chain?
Begins with procurement of raw materials

movement, warehousing and ending with
distribution / delivery to the end users.
Integration among various partners of
value chain is the essence of Supply
Chain
1. Collection / Procurement from producer

Collection
Packing and Stuffing
Loading
2. Movement / Transportation of goods
Transportation by air, sea, rail, road
Freight forwarding
EXIM clearances.

3. Warehousing & Value addition
Warehouses
CFSs / ICDs
Cold storages
Logistics Parks
4. Delivery to end users

Unloading / De-stuffing / Clearances
New Approach to
Supply Chain
The new approach to Supply Chain
requires organizations to improve their
communications and information flow
and convert their traditional supply chain
into an adaptive and real-time supply
network to enable to reduce cost of
distribution, reduction in wastage and
usage of IT.
Logistics
Logistics: Managing and controlling the
flow of goods, information and other
services from their source of origin to
their end distribution in a timely and cost
effective manner.
Logistics Cost / GDP

Logistics
Cost/GDP, In
dia, 13.0%
Logistics
Logistics Cost/GDP
Cost/GDP, Ch
ina, 18.0%
Logistics
Logistics Cost/GDP
Logistics
India, Ja
Cost/GDP, U Cost/GDP, Eu pan,China
11.4%
rope, 10.0%
SA, 9.9%
USA
Europe
Japan
Logistics Cost / GDP
Warehousing & Logistics
Expenditure on logistics accounts for 13%

of Indias GDP.
Warehouses can play a key role in

organizations integrated logistics strategies .
It encompasses the cost of

transportation, warehousing, material
handling, consolidation/deconsolidation and
data management.
When demand exceeds supply, warehouses can

speed up goods movement to customers with
value addition.
Logistics & Warehousing
Coastal shipping
Road transport
Cold chain
Express/ courier
3PL
Logistics
Infrastructure
Rail transport
Logistics &
Warehousing
Freight
Transport
Air Transport
Logistics
Services
Logistics &
Warehousing
Logistics & Warehousing
When supply exceeds demand , warehouses

store goods in anticipation of customers
requirements.
Logistics
Warehousing
Hubs / Parks
In value terms, this translates to over USD

130 Billion.
Conventional Warehouses
Bonded Warehouses
Cold Storage
Liquid / Gas Depots
CFS
ICD
SCZ
FTWZ
Why insurance ?
Insurance of warehouses, goods

stored and fidelity
P.E.PRASAD, M.A., M.Sc.(UK)
Stocks and Property in Warehouses are

exposed to Risks of Fire, Flood & Theft etc.
CWC is a
depositors.
Insurance saves the Corporation from

sudden losses and fluctuation in profit.
Compensation to depositors is easy in

case of any loss / damage to stocks
Stocks and property : Major Risks
bailee
for
stocks
of
its
Basic principles of general Insurance :
Fire
Insurable Interest
Flood, Storm, Tempest, Typhoon & Cyclone
Utmost Good Faith
Natural Calamity i.e. earthquake, Sunami etc.
Principle of Indemnity
Theft & Burglary
Proximate Cause
Riot & Strike
Average condition
- Terrorism
Subrogation
- Malicious Damage
Terms, Conditions and Warranties
Exclusions
Misappropriation by Employees
Contribution
Insurance Management in C.W.C.

-
Main Policies are arranged at Corporate Office

to minimize insurance cost.
Small Policies are arranged at Regional Office

e.g. Machinery Breakdown Policy for ColdStorages, Cash in Chest / Transit at
Warehouses / ROs.
As stocks keep on fluctuating, floater

declaration facility is taken in the fire policy.
Godown Buildings insured at re-instatement

value.
Insurance Management cont.
Insurance Cell at Corporate Office coordinates

with the Regional Offices (ROs).
ROs to keep the Insurance Cell informed about

the following:
-
Opening / closure of warehouse.
Sudden increase in storage of stocks.
Consolidated declaration of value of stocks

in warehouses for the month.
Intimation of claim, submission of copy of

claim form and other documents given to
Insurance Company.
Insurance covers taken at Corporate Office Level

I.
Standard Fire and Special Perils Policy covering Risks of

Fire, Flood, Cyclone, Riots, Strike and malicious Damage
for Depositors stocks and. Material Damage for all
stocks.
Coverage
Sum Insured (Rs in

crores)
General WHs
10900
Custom Bonded,
ICDs,CFSs
1970
30
cont.
VI. Standard fire and Special Perils Policy for Dead

Stoks Items such as Bamboo Mats, Chemicals &
Fumigants, Electrical Equipments, Furniture &
Fixtures, Lorry Weigh Bridges, Office Equipments,
Other Equipments, Sand Snakes, Tarpaulin Covers,
Wooden Crates etc. lying in its CFS, ICDs &
Warehouses for a Total Value:
Rs. 20 Crore
VII. Burglary & Theft Policy
Rs. 10 Crore
VIII.Fidelity Guarantee Insurance policy
Rs. 10 Crore
Insurance Covers to be taken at Regional Office Level
cont.
II. Standard Fire and Special Perils Policy covering Risks of

Fire, Flood, Cyclone, Riots, Strike and malicious Damage
for CFS, ICDs & Warehouse Building including the Office
Complex, Boundary Wall as also Additional Facilities &
fixtures Such as Central AC Plant, Elevators Lifts etc with
a total Reinstatement Cost :
Rs.1600 Crore.
III. For Super-structure above Plinth Level, with Earthquake
as Add-on for the Buildings situated in Earthquake Zone
I & II.
Rs. 500 Crore
IV. Terrorism Cover & EQ for North Eastern States in
Guwahati Region.
Rs. 30 Crore
V. Terrorism Cover for CW Shahalam Road, Ahmedabad
Region.
Rs. 10 Crore
Guwahati Region &

100
CW
Shahalam
Road
Ahmedabad
ICP Attari
Umbrella Policy to cover Office Building

and its contents.
II
Marine Insurance Policy (to cover transit

risk)
III
Motor Vehicle Policy
IV
Cash in Safe / Transit Policy
Deterioration of Stocks & Machinery

Breakdown Policy for Cold Storages
cont.
VI. Public Liability Insurance Policy
Rs. 15 Crore
VII Special Contingency Policy
Rs. 1 Crore
IX. Group Medi-claim Policy for 2200 Retired Employees

their Spouses with all Existing Diseases and No Age Bar
with Annual Limit of Rs. 125000/- Floater per Family
and Spouses of 300 deceased employees with Annual
Limit of Rs. 62500/= each for their Indoor Treatment.
Facility of Floater Declaration
CWC declares to the Insurance

Company the value of the stocks
stored every month. The basis of
declaration is the average value of
stocks at risk on each day of the
month.
Claims procedure
(i)
Immediate intimation of loss to Insurance Company

giving estimated amount of loss (with copy to Insurance
Section at CO).
(ii) Appointment of surveyor by Insurance Company.
(iii) Information, documents and cooperation to be given to
surveyor at the time of investigation and loss
assessment.
(iv) Claim form duly filled in should be submitted alongwith
other relevant documents supporting loss / damage
suffered.
(v) Fire brigade report and Copy of FIR to be submitted
(In case of claims of misappropriation / fraud, the FIR is
to be lodged against the defaulting employees and at the
same time, initiating departmental action/ enquiry
against the employee.
Settlement of Insurance Claims

Parties Involved
- Central Warehousing Corporation
- Depositor
- Insurance Company
- Surveyor
- Customs
Claims procedure
(vi) (a) Salvage Disposal - Is to be done by the Surveyor
but formalities for disposal particularly in the case
of Fertilizers have to be completed by CWC.
(vi)(b) Loss Minimization
Salvaging operations to
be carried out by CWC to minimize the loss and
to arrive at the loss / damages suffered.
(vii) Stock position prior to date of loss to be submitted.
(viii) Surveyor submits
Company.
his
survey
report
to
Insurance
(ix) Insurance Company pays the claim to CWC.

(x)
CWC compensates the depositor after deducting the

outstanding dues, if any.
Warehouse & Inventory Management
Warehouse
A warehouse is a planned space for the
storage and handling of goods and
materials.
A warehouse is any location where
stocks / materials are held during their
journey through supply chains.
Presented by:
P.E.PRASAD, MA, M.Sc. (UK)

Ex . General Manager, CWC
Designed by J.k
Need for Warehouses
Need for Warehouses
Some goods are produced only in a

particular season but are demanded
throughout the year.
To bridge time gap between production and

consumption of products.
To make available the goods to customers as
and when required.
Similarly, certain products are produced

throughout the year but demanded only
during a particular season.
To avoid distress sale.

To help to stabilize prices by matching supply
with demand
Changing Scenario of
Warehousing
Changing Scenario of
Warehousing
Initially storage function was confined as

self-sufficient economic unit (godown).
Gradually emphasis was laid on storing

inventory / stocks to coordinate product
supply and consumer demand.
Attention was shifted towards
storage to ensure timely supply.
With the
development
competencies,
retailers,
storage
whole-salers
(warehouse)
of
&
strategic
transportation
shifted
to
Development of
systems
state-of-the-art warehouse
manufacturers
Setting up of Distribution Centres
Types of Warehousing
Warehousing Models
Food grain warehousing (Govt. & Private)
Private Warehousing.
Cold-chain Storage (Govt., 3PL & Retail)
Public Warehousing.
Industry-specific warehousing (Retail & Auto)
Contract Warehousing.
CFS / ICDs (MTO & Container Rail Operations)

Logistics Parks (MTO & Freight forwarders)
Tank Fields (oilfields)
Warehousing Market Overview

Warehousing sector growth rate is
estimated to be 35 45% per year. It is
expected to grow from USD 20 Billion IN
2008 to USD 55 Billion by 2011.
Market Size & Growth

Size & Growth
Size &
Growth, 20
07-08, 20
Size &
Growth, 20
08-09, 28
Size &
Growth, 20
09-10, 39
Size &
Growth, 20
10-11, 55
2008-09
2009-10
2010-11
The roll-out of GST will play a major role

in the growth of logistics & warehousing
business.
Capacity Expansion
2007-08
Share of Logistics & Warehousing
Capacity Capacity
Capacity
Capacity
Expansion
Capacity Expansion, Expansion, Expansion,
Capacity Expansion, 2010, 91 2011, 100 2012, 110
Expansion, 2009, 83
2008
2008, 75
2009
2010
Warehousing
Other
Logistics
Segments
2011
2012
Inventory Management /Control

in a General Warehouse
Inventory Management
Stock refers to finished products that are

sold by the business. In some cases, raw
materials also
treated as stock if the
business also sells
those products to
customers.
Inventory includes finished goods as well

as the goods and materials used to produce
them.
Inventory Management /Control

in a General Warehouse
Planning/allocation of space
Receiving goods
Accounting / Inventory Management
Storage and Preservation
Pest control
Handling
Theme of the System

The entire system of any type of warehouse
is broadly based on following 3 stages:
Assembling
Despatching
Disposal
Security
Inspection
Record Maintenance
RECEIPT
STORAGE
ISSUE
16
Receipt (Contd.)
General Warehouses - Receipt
Entry of the vehicle in the premises shall be

permitted by the Gate In charge after making
entry in the gate register on the basis of
permission for entry on deposit application by
Office Assistant or truck challan/chit produced
by depositor or his agent.
Receipt of stocks from any depositor viz.

Individuals, Farmers, Merchants, Traders, Cooperative Societies and Govt./Govt. Agencies
for storage.
Stocks include
Foodgrain, Fertilizer, Seeds, Manures, Vegetable
oil, Agriculture inputs/produce and other
notified commodities.
17
Inspection of stock as per prescribed

procedure by Technical Incharge would be
conducted whether the stock is accepted for
storage or otherwise.
18
Receipt (Contd.)
Non food grain stocks, seeds and notified
commodities shall be accepted on said to
contain/and said to weigh basis with
respect to condition of packages. The
condition of the package, if cut and
torn/bleeding/damaged will be recorded.
Introduction of the new depositor shall be
done by an existing depositor/Notary public
or a member of Local Merchants
Association/Office bearer of Agriculture
Marketing Committee or any other Govt.
agencies.
Receipt (Contd.)
Receipt (Contd.)
Incase of existing depositor, introduction shall

not be required.
The specimen signature of the new depositor
shall be attested by the Warehouse Manager on
the specimen signature card.
Deposit Application will be submitted by
depositor or his agent. The Office Assistant
shall allot space giving godown No.after
verifying the signature of the depositor on
Deposit Application form.
20
Receipt (Contd.)
Weighment of stocks shall be done on a

weighing equipment (10% for standard
bags and 100% for non standard bags)
by Weighbridge Incharge if the stock is
found to be acceptable for storage.
Unloading/Stacking of stocks at suitable

location in the godown shall be done by the
Godown Incharge/Godown Asstt. after
counting and would indicate the godown
No./Stack No. on Deposit Application.
Necessary entries shall be made in

deposit application as well as in Lorry
weighbridge register/Weigh check
memo.
Empty truck shall be weighed for Tare weight

and recorded in the Weighbridge register.
22
Receipt (Contd.)
Entries in Godown records shall be made
in the Stack wise Register/Stack
Cards/Deposit application after tallying the
number of loaded units and stacked.
Receipt (Contd.)
Acknowledgement/Warehouse Receipt shall be
prepared in duplicate and issued to depositor
after appending signatures of the Warehouse
Manager or his authorized person. The original
shall be issued to the depositor and duplicate
copy be retained at Warehouse. Signature of the
depositor shall be obtained on the duplicate copy
of the Warehouse receipt/Acknowledgement in
token of having received the same.
24
Receipt (Contd.)
Receipt (Contd.)
The Godown Incharge/Assistant shall make the
necessary
entries
in
Warehouse
Receipt/Acknowledgement
issued/cancelled
register. The godown Incharge/Assistant shall
indicate the identification marks i.e. Deposit Nos
on the lot and shall also prepare the Daily
Transaction Diary and furnish to the office.
Passing out of empty Vehicle The truck/cart shall
be allowed to go out of the gate after making
entries in the Gate Register.
Entries in the Office Registers shall be made in the
Stock Register, Depositors Ledger, Insurance
register and Daily Transaction Register.
The Warehouse Receipts can be pledged with the banks as per R.B.I.
guidelines in vogue from time to time. Any lien informed/confirmed by the
bank be noted in the Warehouse Receipt, Bank Lien register/Duplicate
copy of the Warehouse Receipt.
1)
3)
5)
7)
9)
Documents & Records

Depositor Specimen Signature Card
Deposit Application
Lorry Weighbridge Register (Receipt)
Stack wise Register
Daily Transaction Diary
2)
4)
6)
8)
10)
Gate Register
Weight Check Memo
Insurance Register
Stack Card
Warehouse Receipt/
Acknowledgement
11) Warehouse Receipt/Acknowledgement

12) Stock Register
Issued & Cancelled Register
13) Depositors Ledger
14) Daily Transaction Register
15) Warehouse Receipt Bank Lien Register
26
Issue
Issue
Issue of stocks to any depositor viz.

Individuals, Farmers, Merchants, Traders, Coop
erative Societies and Govt./Govt. Agencies for
storage.
Stocks include Food

grain, Fertilizer, Seeds, Manures, Vegetable
oil, Agriculture inputs/produce and other
notified commodities.
Delivery Order shall be presented by Depositor/

authorized agent in the prescribed format
alongwith original Warehouse
Receipt/acknowledgement.
Verification of Documents: Signature of the
depositor/ agent as made in the delivery order
shall be verified with signature card/file.
Warehouse receipt/acknowledgement shall be
verified to ensure bank lien clearance.
27
28
Issue
Quality Inspection: Stock to be
delivered shall be subjected to
inspection by the Technical Incharge
about its suitability for delivery.
Collection of charges:
Storage, insurance and other charges
as per tariff enforce shall be collected
and a cash receipt will be issued or
noted for billing.
Delivery advice to Godown: Godown In charge

shall deliver the stock as per details in the
delivery order after ensuring payment of all the
dues, instructions.
Entry of empty vehicle: shall be permitted to
enter the gate after verifying the vehicle
number and recording the actual time of entry
in the gate register..
30
Issue
Issue
Weighment of empty vehicle shall be subjected

to weighment and reading shall be recorded in
the weighment register.
Weighment of loaded vehicle (whenever so

needed) shall be done in the presence of
depositor or authorized agent and weight
be recorded in the Weighbridge Register.
Incase of weighment on scales other than
weighbridge a weight check memo shall
be prepared and jointly signed by
Godown Incharge/Godown Assistant and
depositor or authorized agent.
Placement of empty vehicle & loading : Empty

vehicle shall be placed at the loading point and
stock shall be loaded on the vehicle as per the
endorsement on the delivery order.
31
Issue
Issue
Entries in office Registers/records: On the
receipt of delivery order with entire details of
transaction, the Warehouse
Receipt/Acknowledgement copies available in
the Office would be updated.
Preparation of Gate Pass: A gate pass shall be issued in

triplicate after loading of vehicle.
Exit of loaded vehicle shall be made on permitted on
handing over of second copy of the gate pass at gate.
Relevant entry would be made in the gate register.
In case, the stocks covered under a particular

Warehouse Receipt/Acknowledgement are
completely delivered, both the copies of the
Warehouse Receipt/Acknowledgement would be
marked as Cancelled and an entry shall be
made in Warehouse Receipt/Acknowledgement
34
issued and cancelled register.
Entries in the Godown Records: Necessary entries shall

be made in Stack wise Register, Stack Cards, Delivery
Order and Daily Transaction Diary after the deliveries are
effected.
33
Issue
Issue
Documents & Records

Relevant entries shall also be made in
the following Registers
1) Stock Register
2) Depositor Ledger
3) Insurance Register
4) Daily Transaction Register.
1)
3)
5)
7)
9)
Depositor Specimen Signature Card

Delivery Order
4)
Lorry Weighbridge Register (Issue)
Register
Stack wise Register
8)
Daily Transaction Diary
Receipt/
11) Warehouse Receipt/Acknowledgement

Register
Issued & Cancelled Register
13) Depositors Ledger
Transaction Register
15) Warehouse Receipt Bank Lien Register
2) Gate Register
Weight Check Memo
6) Insurance
Stack Card
10) Warehouse
Acknowledgement
12) Stock
14) Daily
16) Gate Pass
36
02/06/2016
Keeping grain quality high
At the end of this session you will know:
AT THE WAREHOUSE
The basic rules of maintaining grain quality in a

bag warehouse
How to maintain the exterior of a warehouse
Maintaining a warehouse
How to maintain the interior of a warehouse
11.3
Keeping the quality of bagged grain
11.4
Maintaining the exterior of a warehouse
For each grain quality grade there is an

expected shelf-life.
A routine daily inspection of the store exterior against a

checklist is essential.
Do not keep cereal grain in open weave bags in a

warehouse for longer than 12 months
Do not keep beans in open weave bags in a warehouse
for longer than 9 months
Warehouse managers apply the principle of First In
First Out (FIFO) i.e. discharge the oldest stocks first
Remember, grain retained longer than its shelf-life may
leave store at a lower grade than when it was received.
Submit the inspection report to the store manager and

tackle problems promptly.
Some suggestions for your checklist:
1. Boundaries of the storage site the perimeter fence or wall must be secure against
unauthorised entry
there must be adequate perimeter lighting
gates and doors must be fitted with good quality padlocks
11.5
11.6
Maintaining the exterior of a warehouse contd
2. Roads and hard standing must -
4. The area adjacent to the store must be clear and neat
Trees must not overhang the store or provide roosts and
have working drainage

have potholes filled
have sign posts to direct trucks and visitors
access for rodents or birds
All rubbish must be cleared, as they may be hiding places

for rodents or insects
Grass and other vegetation must be kept low

Any rodent holes must be filled in
3. The weigh bridge must be kept operational

for stores with a weighbridge, check and calibrate the
weighbridge according to manufacturers instructions and
time intervals, an inspect carefully for mechanical damage.
11.7
11.8
02/06/2016
Maintaining the interior of a warehouse

5. The exterior structure of the store must be inspected
to check for:
Roof leaks and blocked gutters

Doors check lubrication of
hinges and runners, check locks
and bolts
Ventilators ensure opening

and closing, check bird mesh
Drains they must be clear

before wet season
11.9
Store maintenance is best done when

the store is free of stock.
Adopt a programme of planned maintenance as follows:
Walls - keep clean, free of
cracks and whitewashed
Floors fill cracks with concrete
and fill all floor joints with
sand/bitumen/cement mix to
prevent food collecting
Fire precautions have fire
extinguishers in holders just
inside doors and serviced
regularly; have no smoking signs
11.10
Keeping grain quality high
Important points to remember
AT THE WAREHOUSE
Respect the basic rules of good storage

practice, dont store for longer than shelflife by abide by FIFO
Have a vigorous routine for the inspection
Building bag stacks
of the warehouse site and the exterior of

the store, and take any remedial action
promptly
Take the opportunity to maintain and

repair the internal structure of the store at
times when stores are not too full.
Keep walls clean, free of cracks and

whitewashed, keep floors free of cracks
and make sure that fire extinguishers are
serviced regularly
11.11
12.1
How to build a bag stack

Bag stacks must be built on pallets.
How to build a stack

Where to build a stack
Where to stack different products
Keeping a stock card
If pallets are not available then bag stacks can be built on a

plastic sheet or tarpaulin.
Make sure that the pallets are clean, level and have no
protruding nails
12.2
12.3
02/06/2016
How to build a bag stack contd
How to build a bag stack contd

Build the bags into a stack on the pallets using a key system
(as shown below), with units of three bags
Bag stack built using the key system (correct ) and

without the key system (wrong X)
Bag stacks seen
from the side.
Bags of grain
seen from above.
Build the first complete layer of sacks on the pallets using

units of three. Then position sacks in the second layer in
the opposite direct from the first, called the key system.
1st layer
Sacks should be positioned up to the edge of the pallets

(correct ), not fall short (wrong X) or overlap it
2nd layer
12.4
12.5
Where to build a bag stack contd
Where to build a bag stack
... and keep stacks clear of pillars and leave some working
space by the doors.
Doors
IMPORTANT! Decide where about in a store the bag

stacks should be built and respect the spaces
1.5m stack to roof girder
Pillar
1m
Stack to wall
2m
Main gangway
leading to doors
1m
12.6
How high to build the bag stacks
TIP: Use painting lines on the floor to show stack boundaries

and ensure that stacks are correctly positioned.
12.7
Where to stack different products
When using jute or sisal bags, the stack can be built to
Within the store, it is important to ensure that:
around 18 to 20 layers
When using polypropylene or plastic bags the stack heights

12th
must be lower - at about the

layer, the bags should be
moved inwards by one bag width at each layer so that the
sides will slope inwards like a pyramid
Food commodities are kept separately from other goods

Different commodities (grains, flour etc.) and/ or different
consignments (new and old) must be placed in different
stacks
Pesticides, fertilizers and cements are not placed in stores
The bag stack must never be higher than it is wide,
that are being used for food.
otherwise it will be unstable
PREVENT CROSS-CONTAMINATION AND DETRIORATION

12.8
12.9
02/06/2016
Keeping a stock card
A Stock Card
A stock card is used for keeping an account of the bags

movements history and of the pest control actions.
Each stack must have its own stock card.

The card should record:
The grain type, variety (if applicable) and grade
The date on which any stock additions or removals are
made
The weight of all additions or removals, with a running tally
to show total stock and number of bags
Fumigations or insecticide treatments are marked on the
back of the card
Front stock record
Back pest control record
12.10
12.11
Keeping high quality grain

Build bag stacks on pallets that are clean and have
AT THE WAREHOUSE
no protruding nails
Allow space between bag stacks and walls 1m,

stacks and roof girders 1.5m, the stacks opposite
the doors 2m
Construct bags stacks using a key system, never
have stacks that are taller than wide. Build in 18 to
20 layers if jute or sisal sacks. For polypropylene
sacks build 12 layers and a pyramid thereafter.
Never keep fertilisers or pesticides in the same
stores as grain and segregate different grains,
grades and consignments
A stock card should be completed for each stack
Good store hygiene
12.12
13.1
Routine cleaning of the store

The store must be kept clean and tidy. Inside the store it
is important to:
How to keep a store clean
Sweep it clean at the end of each day. Sweep from the
What to do with grain residues

How to do routine store inspection
What to do with damaged grain
back of the store towards the front so the dust will go out
through the door.
13.2
13.3
02/06/2016
Routine cleaning of the store contd
What to do with grain residues
Carefully clean all cracks and crevices daily
Collect the grain residues swept up each day

Keep them in a sack
Recondition the collected residues (by sieving and handpicking)
Re-bag and return the grain to the stack
Each week, sweep the walls, stack surfaces and roof

beams to remove all dust and debris. Start at the top and
work downwards.
*NOTE: If a fumigation is being undertaken, the grain residues

must be placed under the fumigation sheet.
13.4
13.5
Routine inspection of the grain contd
Routine inspection of the grain

It is essential to inspect the grain every day, so that
action is taken immediately a problem appears.
It is essential to inspect the grain every day, so that

action is taken immediately when a problem appears.
Keep a record of your routine inspection:
At the start of each day check:

1. The store for signs of water leakage
2. The floor and tops of bag stacks for signs of damage
(rodent or insect) e.g. grains under or around pallets
List items to be inspected

Sign and date the list to show that
inspections have been completed
Have a space to record necessary

actions, who will be responsible
and by when they must be done
13.6
13.7

3. For holes in the bags that need to be repaired
4. Check for insects in the store:

- inspect in the late afternoon (16.00h) for moving insects
- inspect the ears of bags and crevices between bags
- listen for the sounds of insects eating grain
- use a torch to inspect the dark areas of the store
13.8
13.9
02/06/2016
What to do with damaged grain
Damaged stock may present a danger

(cross- contamination) to the other grain in the store.
Each day sweep the store and clean

cracks and crevices
Each week clean bag stack surfaces,
Actions when stock is damaged :
walls and roof girders
Sample and have its condition verified by an independent
Collect grain residues, recondition, rebag
grader
If insect infested, cover it with a plastic sheet (weighted to the

floor) to prevent cross infestation to undamaged grain
If verified that the grain is damaged, move it to a location where

it will cause least risk to good stock
If grain is deteriorated, but not insect infested, sample all bags

and identify those still in good condition - during the movement
13.10
and add to a stack
Inspect stock daily for problems with such

as water leakage, infestation, etc.
Record inspection against a checklist and

note any action required
Ensure that damaged grain is managed so

that undamaged stock is not affected
13.11

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Dr.

Shalendra, Program Director

Supply chain management & logistics

Role of moisture, temperature and humidity during storage

Quality assurance - pest control and disinfection

Insurance and claim settlement

Warehouse and inventory management

Sampling procedure for bags and bulk storage

Procurement of Rice and Maize

Grades and standards of agricultural commodities

Code of storage practices

Control of storage losses

Statutory frame work for agricultural produce

Stacking of goods and maintaining stock account

Negotiable Warehouse Receipts and pledge finance

Futures & Spot Market Role of Warehouses

Managing Director, APSWC, Hyderabad

Shri Vijaya Bhaskar

Central Warehousing Corporation

Food Corporation of India

Shri Murali Mohan

Food Corporation of India

Shri TVSRVP Murthy

Central Warehousing Corporation

Shri M Srinivasulu, FCI

Food Corporation of India

Central Warehousing Corporation

NABARD and NCDEX

H Shiva Sankar Rao

RMD Mustafa Javeed

Syed Jani Basha

IUMN Prasad Naidu

VSVN Radha Krishna

LVV Bhasak Rao

SSC Papa Reddy

Warehouse and Inventory Management

Control of storage losses within the norms

Thirdly, storage in the sub-standard godowns leads to loss due to attack by

Production and Marketable Surplus

To get better prices when the glut situation is over.

Access institution credit to cheaper rates.

To safeguard against various kinds of losses.

Traditional Storage System: (Generally being adopted in the country)

Metallic bins, Ferro-cement bins, plywood bins, polythene bins etc.

Scientific Storage System:

Yard or ground storage system

Special commodities warehouses

Cold storage warehouses

invited private parties to an attractive proposition of construction of godowns for

Supply Chain & Logistics Management

Supply Chain Management is an important component of business where products

Role of Temperature, Moisture Content and Humidity during

Fig 1. Spoilage of grain due to development of insects & fungi.

4. Quality Assurance - Pest Control and Disinfection

DDVP has a pleasant smell and

a colourless liquid. It is soluble in water at 1% and soluble in most organic solvents.

characteristic odour that in most instances makes phosphine detectable at

Insurance of Warehouses, Goods Stored and Fidelity

Terrorism covers for North Eastern States.

Burglary & Theft Policy

Fidelity Guarantee Insurance Policies

Public Liability Insurance Policy

Special Contingency Policy