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Supply Chain Management of Food grains Rotting in Indian

Warehouses

Responding to a public interest petition, the Supreme Court of India has


directed the government of India to distribute excess food grains to the
poorest of the poor free instead of letting them rot in the warehouses of the
government. The union minister for agriculture & civil supplies, Mr.Sharad
Pawar, had commented that it is not possible to implement the suggestion. It
was Supreme Court’s turn to remind the minister that it was not a suggestion
but an order. The Prime Minister has not come forward with a statement that
the Supreme Court should not interfere with issues relating to policies. It is
unusual for otherwise cool prime minister to take such a standoffish
approach.

The adviser to the commissioner of the Supreme Court has stated that
whatever the court has directed is within the policy frame defined by the
government and not outside of it. It is therefore not over stepping on policy
formation turf of the government.

First off all the mess created, it is a sad state of affairs that a public interest
petition has forced the issue on the government & the minister to take
cognizance of the fact that the food grains are rotting while the poor are
dying of malnutrition. The government otherwise has not been concerned
either about rotting food grains or about the malnutrition deaths and
suffering of the poor people. When forced by the Supreme Court the
government is now stating that food grains will not be distributed free but
sold at cheaper rates to the poor. It also says that the data on BPL population
is based on decade old information and therefore it can not implement the
directive any equitable fashion.

Rotting Food Grains

The finding shows that as on Jan 1 this year, over one million tonnes of food
grains were found damaged in FCI depots, enough to feed over 600,000
people for over 10 year. "The FCI warehouses have enough space to store
food grains properly. Yet the grains are rotting in open spaces on their
premises while millions are starving. It's a national shame," said Dev Ashish
Bhattacharya, who filed the RTI application on January 6, 2010.
The storing capacity of covered warehouses of FCI is around 25.66 million
tonnes and the total stored stock is around 21.83 million tonnes.
Empowered Group of Ministers:

And yet we hear that the storage capacities are inadequate. What stopped the
government from building more warehouses with proper storage systems? If
it did not have the warehouses, the job could have been outsourced on build,
operate & own (or transfer) basis to the private sector. I am sure we have the
data relating to actual production, procurement, stocks held and released for
distribution. We also have data about maximum reserves ever drawn after
poorest of monsoon to reset the limits of stocks that the government must
carry for emergencies and release the excess to the market to stabilize the
prices and ward off hoarding. But it seems the government seems to be the
hoarding the stocks and denying access to the people. The food inflation was
a result of such holding back of stocks and no one has lost the job as yet.

Now the administration has come to such a sorry state that no individual
minister is able to handle complex issues and every now & then we hear
about EGOM (empowered group of ministers or secretaries) as a decision
making unit of the government. That is good for coordinated action but
without group will they not coordinate? Now that the Supreme Court has
intervened, I expect a empowered group of ministers comprising ministers of
agriculture, law, commerce, surface transport, railways and of course finance
to be formed by the PM to implement the scheme for selling the grains at
cheaper rates!

Supply Chain Management and just Warehouse Managers

What we need is a state of the art mechanism for supply chain management
of food grains and perishable commodities. Every organization engaged in
manufacturing or trading has learnt to manage the inventories on just in time
basis. If not, the inventory is maintained at reasonable levels for quick &
effective response at least possible costs. No one carries the inventories
based on old experiences and from the era of artificial constraints of the
“Licence Raj”. Computerized simulated models can be developed to manage
the stocks on real time basis to take care of market fluctuations in price,
demand & supply. All one needs is a committed authority like UID project,
headed by Mr.Nandan Nilekani, to design and implement a system fit to
serve 1.3 billion people. We need such a system in place before we can have
the Right to Food Security Bill on the table. We have ended up with right to
education without schools, teachers and class rooms. We don’t need a
minister of sports (spoiled?) but an empowered executive whose job
depended on the success of the project. Just let one of the IIMs develop
suitable models for state as well as centre level for supply chain
management.

Empower the People

But alas! We are busy with tempering of the ball or spinning it. Let us not
defend or fix the match on the fields of the farmers. Let us not give room for
the Supreme Court to give directives out of our inaction, inefficiency and
lackadaisical performances. Let us not also give handles to NGOs or anyone
to file public interest litigations to draw the attention of the final appeal
court of the land by being on the wrong side of public interest and
constitution. That can happen only by empowering the people and not the
politicians. A UN study revealed that 63% of children in India go to bed
without any food. I simply wonder if that is not the future “Vote Bank” for
our ever hungry politicians!

Vijay M.Deshpande

Corporate Advisor,

Strategic Management Initiative

Pune

September 6, 2010

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