FCI has been storing food grains in private warehouses for many years - FACTLY
Sai Krishna Muthyanolla
January 8, 2021
A post saying ‘Modi government has awarded Adani the contract to store food grains for 30 years by leaving out the FCI’ is going viral on social media. Through this article let’s fact-check the claim made in the post.
Claim: Modi government has awarded Adani the contract to store food grains for 30 years by leaving out the FCI.
Fact: A resolution was made to involve private parties in investment, construction, and operation of godowns and silos in National Policy on Handling, Storage and Transportation of Food grains-2000. Accordingly, FCI has invited global tenders as the central government wouldn’t invite tenders directly in this regard in 2003 and subsequently, the Adani group was awarded a contract to build storage facilities back in 2005. In line with the 2000 policy, FCI has introduced Private Entrepreneurs Guarantee (PEG) Scheme in 2008 which facilitates private participation in building and operation of food grain storage facilities. Since then many private companies alongside with Adani group have been awarded contracts to construct and operate godowns and silos. Hence the claim made in the post is MISLEADING.
‘In order to reduce storage and transit losses of food grains at farm and commercial level, to moderate the system of handling, storage and transportation of the food grains procured by the Food Corporation of India (FCI) and to bring in additionality of resources through private sector involvement’ in 2000, the then government has approved a National Policy on Handling, Storage and Transportation of Food grains. In view of modernization and up-gradation of bulk grain handling infrastructure, a resolution seeking private sector participation in developing infrastructure related to building handling, storage, and transportation under different PPP models was made under this policy. Accordingly, private players were allowed to build storage facilities in which food grains procured by the government will be stored and in return, they will be entitled to storage charges.
According to Private Entrepreneurs (PEG) Scheme which was introduced in 2008 in line with the 2000 policy, a private player who invests in the construction of godown under PPP model would be assured by the FCI of at least 10 years hire as a return for investment. Further, for investing in the construction and operation of steel (modern) silos, the private party would be guaranteed by FCI of hiring their silos for 30 years.
Generally, the central government under Private Entrepreneurs Guarantee Scheme does not invite tenders directly from private parties for the construction and operation of godowns but invites through FCI. FCI usually invites tenders from private parties under different models mentioned below.
In line with the 2000 policy, FCI inked a deal with Adani’s Agri logistic company in 2005 for creation of 5.5 LMT of storage capacity. News article regarding this can be read here.
Further, under the same scheme, information related to FCI assigning tender to few other private companies alongside Adani’s company between 2016-2020 can be found here. It is noteworthy to mention that as per this information provided by FCI, Adani’s Agri company was not among those companies who were given a contract in 2020.
Further, when the news in the post went viral, Adani company issued a clarification saying that in compliance with the 2000 policy, FCI had invited tenders to build silo grain storage infrastructure in 2003 and subsequently Adani group was awarded a contract in 2005. The project was commissioned in 2007 for a concession period of 20 years. Also to put things into perspective they have categorically stated that ‘Adani Agri Logistics Ltd. (AALL) was established in 2005 much earlier than the ruling government came into power’. With all these, we can conclude that the Adani group is into godown construction and operation since 2005 much before the enactment of new farm laws and that the central government does not invite tenders directly in this regard but through FCI. It is also clear that the practice of involving private players in the storage of foodgrains is not new.
In the light of the ongoing farmers protest over the newly enacted farm laws which allow for contract farming, posts like these are being widely shared across social media with misleading claims.
To sum it up, FCI is storing food grains in private godowns for many years.