Efficient Storage Solutions for Food Grains in India

Every year, India harvests an enormous quantity of food grains, and the 2024-25 season set a new record with production touching nearly 354 million tonnes. But producing grain is only half the battle. If wheat and rice cannot be stored safely after procurement, bumper harvests turn into a tragedy of rotting stockpiles, distress sales, and rising prices. This is why food grain storage sits at the very heart of the country’s food security architecture. Storage decides whether a record harvest actually translates into year-round availability for over 80 crore people who depend on the public distribution system.

Why storage is the backbone of food security 🔗

Food grains are seasonal in production but consumed throughout the year. To bridge this gap, the government must hold large buffer stocks. The Food Corporation of India (FCI) procures wheat, rice, and other grains at the Minimum Support Price to protect farmers’ incomes and then keeps these reserves ready for distribution under the National Food Security Act and welfare schemes.

Good storage performs four essential functions. It reduces post-harvest losses, preserves grain quality through scientific methods, stabilises prices by preventing panic selling, and maintains the buffer stocks that the PDS relies on. When storage fails, the costs are real. Government data indicates that around 6.58% of food grains are lost during storage alone due to pests, rodents, moisture, and spillage, with storage accounting for a large share of total post-harvest losses.

How food grains are actually stored 🔗

The FCI does not store grain in one single way. It uses a mix of storage types depending on availability, cost, and the nature of the grain. Broadly, storage falls into two main physical categories.

Covered godowns 🔗

Covered storage refers to grain kept inside fully roofed and walled structures such as godowns, warehouses, or silos. This is the preferred form of storage because it offers the best protection against rain, heat, pests, and rodents. The bulk of central pool grain sits in these covered facilities, where it can be fumigated and treated with pesticides under controlled conditions.

Cover and Plinth (CAP) storage 🔗

When covered space runs short, grain is stored in the open under the Cover and Plinth method. Here bags are stacked on raised plinths, placed on wooden crates used as dunnage to keep them off the ground, and covered with tarpaulins. CAP is cheaper and quicker to set up, but it is far more vulnerable to weather damage and quality loss. Reducing dependence on CAP storage has been a long-standing policy goal precisely because of these risks.

As of July 2025, the total covered and CAP storage capacity available with the FCI and state agencies for central pool grains stood at 917.83 lakh metric tonnes (LMT). To put this in perspective, the peak storage requirement during a normal procurement season is roughly 650 LMT, so the national system today has comfortable headroom that did not exist a decade ago.

The network of storage agencies 🔗

The FCI cannot build and own every godown it needs. Doing so would lock up enormous amounts of capital. Instead, it runs a layered network where it owns some capacity and hires the rest. In fact, a large majority of the storage the FCI uses is hired rather than owned, which reflects a deliberate strategy of staying flexible during peak procurement seasons.

Central and State Warehousing Corporations 🔗

Two public bodies play a central supporting role. The Central Warehousing Corporation (CWC) operates hundreds of warehouses across the country and also runs specialised facilities like rail-side warehouses and container freight stations. Alongside it, the State Warehousing Corporations (SWCs) provide storage at the state level. Together, these agencies handle a substantial portion of central pool grain, allowing the FCI to scale up storage without building everything itself.

Private entities 🔗

Private warehouse owners form the third leg of this network. When the capacity available with the CWC, SWCs, and state agencies is fully used, the FCI can hire additional godowns from private operators to meet urgent, short-term needs. This combination of owned, public-hired, and private-hired space gives the system the elasticity it needs when a record harvest suddenly floods the procurement centres.

The Private Entrepreneurs Guarantee (PEG) scheme 🔗

By the mid-2000s, India faced a clear storage shortfall. The FCI needed millions of tonnes of additional capacity, but its own plan funds were not enough to build it. The answer was to bring in private money. Launched in 2008, the Private Entrepreneurs Guarantee (PEG) scheme was designed to augment covered storage capacity through a public-private partnership model.

The mechanism is elegant. Under PEG, godowns are constructed entirely by private entrepreneurs, the CWC, or state agencies, with no government funds spent on construction. In return, the FCI guarantees that it will hire the completed godowns for a fixed period, giving investors the confidence of an assured return on their investment.

How the guarantee works 🔗

The length of the guarantee depends on who builds the storage. For godowns built by private parties, the FCI guarantees hiring for ten years, while for godowns built by public sector agencies the guarantee period is nine years. Selection happens through a transparent two-bid tendering process, and rates are benchmarked against approved CWC rates so that the cost to the public exchequer stays controlled.

The scheme started in non-Decentralised Procurement (DCP) states and was later extended to DCP states as well. Over the years it has delivered significant capacity. Reports indicate that more than 154 lakh MT of capacity was sanctioned under the scheme across roughly 20 states, with the majority of it completed. The biggest advantage of PEG is that it expanded scientific, covered storage rapidly while keeping the government’s own capital outlay close to zero.

Modernisation: the shift to steel silos 🔗

Conventional jute-bag godowns, while reliable, are labour-intensive and slow. Loading and unloading depend heavily on manual labour, and grain can still suffer losses over long storage periods. The next step in storage modernisation is the steel silo: a tall, cylindrical bulk-storage structure with mechanised handling.

Why silos matter 🔗

Steel silos store grain in bulk rather than in bags, which sharply reduces handling losses and speeds up the movement of grain in and out. They allow scientific storage with better protection against pests and moisture, and many newer silos are equipped with computerised real-time monitoring systems. The government approved an action plan to build silo capacity in PPP mode specifically to modernise storage infrastructure and improve the shelf life of stored grain.

Progress has been steady. As of mid-2025, silos with a capacity of 27.75 LMT were operational at 48 locations, with another 36.87 LMT under construction at 87 locations and further capacity under tendering. Most silo projects use road-fed or rail-fed models that enable efficient evacuation of grain. Private players such as Adani Agri Logistics and the National Bulk Handling Corporation have brought technical expertise into these projects.

The limits of silos 🔗

Silos work very well for wheat, but storing milled rice in steel silos is still at an experimental stage. Pilot projects in states like Bihar are testing whether rice can be stored this way without quality loss. The high upfront cost of silos and the time needed for land acquisition also mean that the rollout, while promising, has been gradual rather than sudden.

Beyond the FCI: decentralised and cooperative storage 🔗

Centralised storage has one weakness. Grain often has to travel long distances from villages to large depots and back again, adding transit cost and risk. To fix this, the system has been moving towards storing grain closer to where it is grown.

Decentralised storage through Primary Agricultural Credit Societies (PACS) allows village-level institutions to procure, store, and distribute grain locally, with storage capacities typically ranging from 500 to 2,000 metric tonnes. This was given a major push by the World’s Largest Grain Storage Plan in the Cooperative Sector, approved in 2023. The plan uses a hub-and-spoke model and converges several existing government schemes, with an ambitious goal of creating around 70 million tonnes of storage capacity at the PACS level.

The significance of this approach goes beyond just adding space. By putting godowns in villages, it helps farmers avoid distress sales, lets them store produce until prices are favourable, and turns PACS into multi-purpose rural institutions that also serve as procurement centres and fair price shops. Earlier schemes mostly added capacity at the top of the system; this one tries to fix the ownership gap at the bottom.

Supporting schemes and the road ahead 🔗

Several financing schemes feed into storage expansion. The Agriculture Infrastructure Fund (AIF), launched in 2020, has sanctioned tens of thousands of crores for projects including warehouses and cold storage. The Agricultural Marketing Infrastructure scheme supports warehouse construction, while a dedicated Central Sector Scheme focuses on building storage in the North Eastern states, Himachal Pradesh, Jharkhand, and Kerala. Asset monetisation efforts are also identifying vacant FCI-owned land for new godowns.

Taken together, these efforts show a clear direction. India is moving from a system that relied heavily on open CAP storage and manual handling towards one built on scientific covered godowns, mechanised steel silos, public-private partnerships, and decentralised village storage. The challenge of safeguarding every grain for 1.4 billion people will demand continued investment, but the foundations being laid today are far stronger than those of even a decade ago.

What do you think? Should the focus shift further towards decentralised PACS-level storage in villages, or does India still need to invest more heavily in large centralised silos? And given the experimental status of rice silos, how should the country balance modernisation with the proven reliability of conventional godowns?

References

1. https://fci.gov.in/storages.php
2. https://agriculture.institute/indian-agricultural-development/modern-technology-revolutionizing-foodgrain-handling-india/
3. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2172351
4. https://cewacor.nic.in/
5. https://www.pib.gov.in/PressReleasePage.aspx?PRID=1602455
6. https://warehousingwb.com/services/storage-food-godown/godowns-under-peg-scheme/
7. https://www.indiafilings.com/learn/private-entrepreneur-guarantee-scheme-pegs/
8. https://ddindia.co.in/2025/09/from-harvest-to-home-building-resilient-infrastructure-for-food-grain-storage/
9. https://compass.rauias.com/current-affairs/worlds-largest-grain-storage-plan-in-the-cooperative-sector/