The Paradox of Northern Farming Communities

In terms of sheer quantum of physical purchases and scale of commodity movement and storage, the operations of the Food Corporation of India (FCI) are perhaps without parallel anywhere in the world. The public sector behemoth organizes procurement of about 40 million tonnes (mt) of wheat and rice every year, or close to a fifth of the country’s aggregate foodgrain output.1 Much of this is concentrated over short time spans, calling for an enormous deployment of financial and logistical resources. The bulk of wheat, for instance, is bought between mid April and the first week of May. At its peak, daily purchases touch 1 mt or more, the equivalent of 1 lakh trucks or 435 rail rakes of 2,300 tonnes each. Payments are made within 72 hours and the grain that is procured and loaded into 50 kg jute bags travels an average distance of 1,500 km. Financing these operations is in itself big business, involving an annual working capital outlay of Rs 30,000 crore, met through a consortium of 61 banks.2