Food Corporation of India (FCI) Part- I

The Food Corporation of India was set up under the Food Corporation's Act 1964, in order to fulfil the following objectives of the Food Policy:

  • Effective price support operations for safeguarding the interests of the farmers.
  • Distribution of food grains throughout the country for the public distribution system.
  • Maintaining a satisfactory level of operational and buffer stocks of food grains to ensure National Food Security.
  • Since its inception, FCI has played a significant role in India's success in transforming the crisis management oriented food security into a stable security system.

Procurement

  • The Government policy of procurement of Foodgrains has broad objectives of ensuring MSP to the farmers and availability of food grains to the weaker sections at affordable prices. 
  • It also ensures effective market intervention thereby keeping the prices under check and also adding to the overall food security of the country.
  • FCI, the nodal central agency of Government of India, along with other State Agencies undertakes procurement of wheat and paddy under price support scheme. 
  • Coarse grains are procured by State Government Agencies for Central Pool as per the direction issued by Government of India from time to time. 
  • The procurement under Price Support is taken up mainly to ensure remunerative prices to the farmers for their produce which works as an incentive for achieving better production.
  • Before the harvest during each Rabi / Kharif Crop season, the Government of India announces the minimum support prices (MSP) for procurement on the basis of the recommendation of the Commission of Agricultural Costs and Prices (CACP) which along with other factors, takes into consideration the cost of various agricultural inputs and the reasonable margin for the farmers for their produce.
  • To facilitate procurement of food grains, FCI and various State Agencies in consultation with the State Government establish a large number of purchase centres’ at various mandis and key points.
  • The number of centres and their locations is decided by the State Governments, based on various parameters, so as to maximize the MSP operations. 
  • For instance for Wheat procurement 14,838 procurement centres were operated during RMS 2019-20 & for Paddy procurement 57,353 procurement centres are operating in the ensuing KMS 2019-20. 
  • Such extensive & effective price support operations have resulted in sustaining the income of farmers over a period and in providing the required impetus for higher investment in agriculture sector for improved productivity.
  • Whatever stocks which are brought to the Purchase centres falling within the Government of India’s specifications are purchased at the fixed support price. 
  • If the farmers get prices better than the support price from other buyers such as traders/millers etc., the farmers are free to sell their produce to them.
  •  FCI and the State Government/its agencies ensure that the farmers are not compelled to sell their produce below support price.

Movement

  • Movement plays a very important role in the working of FCI as well as in fulfilling the objectives of Food Policy and the National Food Security Act.

- FCI undertakes movement of food grains in order to:

  • Evacuate stocks from surplus regions
  • Meet the requirements of deficit regions for NFSA/ TPDS and Other Schemes
  • Create buffer stocks in deficit regions
  • Punjab, Haryana and Madhya Pradesh are the surplus States in terms of wheat procurement vis-a-vis their own consumption. 
  • Punjab, Haryana, Andhra Pradesh/ Telangana, Chhattisgarh and Odisha are surplus States in terms of rice procurement vis-à-vis their own consumption.
  • On an average of 40 to 42 million tonnes of foodgrains are transported by FCI across the country in a year. 
  • FCI undertakes massive movement operation of food grains all over the country encompassing around 1906 FCI owned & hired depots/Slios, 557 rail-heads (owned by Indian Railways and others) and 98 FCI own sidings.

- Movement Plan is prepared on monthly basis keeping in view:

  • Quantity available in surplus regions
  • Quantity required by deficit regions
  • Likely procurement
  • Vacant storage capacity both in consuming as well as procuring regions
  • Monthly allotment/ off-take of food grains

Mode of Transportation

  • Movement of foodgrains is undertaken by Rail, Road and Waterways. Around 85% of stocks are moved by rail to different parts of the country.
  •  Inter-State movement by road is mainly undertaken in those parts of the country which are not connected by rail.
  •  A small quantity is also moved by ocean vessels to Lakshadweep and A&N Islands as well as through coastal shipping and riverine movement to Kerala/Agartala (Tripura).
  • FCI has 98 own Rail sidings, where foodgrain rakes are placed directly at FCI depots. 
  • Other than that, foodgrain stocks are transported ‘to and fro’ from the nearest rail-heads of Indian Railways.
  • FCI has been able to ensure the availability of sufficient foodgrain in all States by proper planning.
  • About a decade back, nearly 90% of stocks were moved Ex-North mainly from Punjab & Haryana, which has now come down to 72% due to increase in procurement of rice in Andhra Pradesh, Chhattisgarh, Odisha & West Bengal and wheat in Madhya Pradesh, Uttar Pradesh and Rajasthan.

Other Initiative in Movement of Foodgrains  

  • FCI has been exploring the feasibility of moving food grains through multimodal costal/ riverine mode so as to supplement rail/road movement particularly for the North Eastern States and Kerala and has made the following achievements:
  1. During 2013-14, 2014-15, 2015-16 and 2016-17, 12778 MT, 97754 MT, 18677 MT and 13915 MT Rice moved from Andhra Pradesh to Kerala through multi-modal coastal movement.
  2. FCI moved 10,000 MT of raw rice (as a pilot project) through multimodal riverine movement from Andhra Pradesh to Tripura (NE) via Ashuganj Port in Bangladesh during 2014-15.
  3. FCI moved 9691 MT and 2267 MT Raw Rice during 2015-16 and 2016-17 respectively through multimodal riverine movement from West Bengal to Tripura (NE) via Ashuganj Port in Bangladesh.  

Sales

  1. Operations
  • In order to achieve the food security of the country, the Sales Division looks after one of the most important operations i.e. the distribution of food grains under TPDS/NFSA & Other Welfare Schemes.
  • Government of India fulfils the objectives of food security through the Public Distribution System. 
  • Public Distribution System strives to meet the twin objectives of price support to the farmers for their product and supply of food grains at affordable prices. 
  • It is against the stocks procured under price support, the Government releases a certain quantity of food grains in each State under the Public Distribution System. 
  • This mission of the Government of India is translated into reality by the FCI.  
  • In order to implement the food policy of Government, FCI has to fulfil certain objectives which are as follows:
  1. To ensure an equitable distribution of available food grains at reasonable prices to the vulnerable sections of  society throughout the year;
  2. To maintain stability in food grains prices throughout  the country during the year;
  3. To maintain an adequate buffer stock of food grains to deal with fluctuations in production and to meet unforeseen exigencies and natural calamities.
B. Functions
  • The functions of the Sales Division are as follows:
  • Management of issue of wheat & rice within overall allocation under different schemes of Ministry of CAF&PD at Central Issue Price which are as under:-
  •  NFSA & Tide over-allocation and Special additional allocations.  
  • Other Welfare Schemes (OWS) viz.  Mid-Day Meal, Annapurna, Welfare Institutions & Hostels, SC/ST/OBC Hostels, Wheat     Based Nutrition Programme and Scheme for Adolescent Girls.
  • Defence/ Para-Military Forces (CRPF/BSF/ITBP).
  •  Natural calamities and festivals.
  •  Open Market Sales Scheme (Domestic). 
  • Matters related to Stocking Norms of food grains for Central Pool.
  • Disposal of issuable old stocks of food grains through         open tender
  • Policy matter related to reimbursement of Hill Transport Subsidy (HTS) up to 31.03.2017 to the entitled States/UTs being the cost of transportation of food grains from base depots to Principal Distribution Centres (PDCs).
  • Release of wheat at pre-determined prices in the open market from time to time to enhance the supply of wheat especially during the lean season to moderate the open market prices.  
  • Disposal of pulses through a normal channel and through e-tenders.

Stocks Overview

  • Food grain stocking norms refers to the level of stock in the Central Pool that is sufficient to meet the operational requirement of food grains and exigencies at any point of time. 
  • Earlier this concept was termed as Buffer Norms and Strategic Reserve.
  • Presently stocking norms fixed by Government of India vide OM dated 22.01.2015 comprise:
  • Operational stocks:  for meeting the monthly distributional requirement under TPDS and OWS.
  • Food security stocks/reserves: for meeting shortfall in procurements
  • Stocking norms are for a quarter and consist of operational stock for the quarter and strategic reserve to take care of shortfall in production or natural calamities.

Import and Export

Overview
  • Import and Export Division undertakes the work of Export and Import of food grains as per the guidelines, policy and instructions of Government of India.

Functions of Import Export Division

  • Import and Export of food grains (mainly Wheat and Rice) and the issue of stocks under various schemes of the World Food Program/ Government aid on a donation basis to other countries.
  • Assisting the Ministry of CAF&PD in the formulation of policies regarding import and export of wheat and rice. 
  • Formulating guidelines/procedures to be followed in import/export of food grains in accordance with the policy decision of Government Of India and forwarding the same to all concerned field offices for necessary compliance.
  • Maintaining liaison with concerned agencies like STC, MMTC, PEC, Railways, Ministry of shipping and Port trusts etc. prior, during and post-import/export operations.
  • Preparation of agenda/Information/data for a meeting of High-level Committee for day to day monitoring and resolving of operational issues during import/export of food grains.
  • Preparation of daily bulletin/statement depicting port-wise vessel’s Arrival, Despatch and Movement of imported stocks during imports and Port/CPSU/Country wise quantity of food grains lifted and shipped during export of food grains.
  • Keeping watch on International demand and supply situation as well as price, in relation to Wheat and Rice.

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Blog Post written by:
Anurag Trivedi
UPSC Mentor