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Explained: What is ‘storage gain’ in wheat and why Punjab procurement agencies don’t want to shell it out

After Centre relaxed the Fair and Average Quality (FAQ) norms for wheat procurement this season raising the permissible limit of ‘Shrivelled and Broken grains’ from 6% to 18%, Punjab’s state procurement agencies (SPAs) are now seeking a waiver of ‘storage gain’. If allowed, the waiver in actual terms would stand at around Rs 150 crore for the current season. What is ‘storage gain’ and why do Punjab agencies want a complete waiver.

What is ‘storage gain’ in wheat?

Wheat, considered a ‘living grain’, tends to gain some weight during storage. This is known as ‘storage gain’ and it mostly happens due to absorption of moisture. There are three parts of the grain — bran (outer layer rich in fibre), germ (inner layer rich in nutrients) and endosperm (bulk of the kernel which contains minerals and vitamins). The moisture is mostly absorbed by the endosperm.

Who compensates whom for ‘storage gain’?

State procurement agencies, which purchase and store wheat at their facilities, are required to give one kg wheat extra per quintal to the Food Corporation of India (FCI), the Centre’s nodal agency for grain procurement, to compensate for storage gain.

While 20% of wheat, procured by the FCI and the SPAs, is moved immediately after procurement, it is usually on the remaining 80%, which is moved out after July 1 every year, that storage gain has to be accounted for due to longer storage duration.

What is the storage gain calculation for this year?

This year 96 lakh metric tonnes (LMT) wheat was procured in Punjab by all agencies. As 80% of this figure comes to 76.80 LMT, it means that storage gain would be around 7.68 lakh quintals on this. At MSP rate of Rs 2,015, it would cost state agencies Rs 154.74 crore if they are unable to supply 7.68 lakh quintals extra during movement of 76.80 LMT wheat. SPA sources said that FCI deducts that amount during final settlement of dues to balance the books.

Why do state agencies want a waiver this year?

They argue that grain procured this year is both shrivelled and broken and therefore will not gain much weight.

Vinod Kumar Sharma, the president of Joint Coordination Committee of Punjab SPAs, which has demanded storage gain waiver, said: “Due to shrivelled and broken grains, the size of endosperm is small, which is usually above 75%. So, this will lead to less absorption of water as compared to wheat procured without FAQ norms relaxation earlier.” A major reason to seek this waiver is also the fact that the SPAs in Punjab are already cash-strapped.

Is this FCI vs SPA fight new?

Till 1986-87, the SPAs kept the entire ‘storage gain’ – actual grain – of the procured crop and handed the rest to FCI. In 1999, Punjab Cabinet set one kg gain per quintal as storage gain and said that this would go to the state, not to SPAs. FCI then protested and said that the procurement was done using Centre’s money so the ‘gain’ belonged to the FCI. Around 2004, it made norms on the lines of Punjab’s 1999 decision and fixed the storage gain quantity. State procurement agencies have since been protesting calling the FCI’s method unscientific, and demanding a region-wise 3-year study of climatic conditions, storage facilities to come up with a method to determine storage gain. While FCI had got a study done by the Indian Council for Agriculture Research (ICAR) earlier, the SPAs argue that it had several shortcomings, including small sample size, few storage places, and even the overall methodology.

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