Decentralized Grain Storage In India

Decentralized Grain Storage Plan in Cooperative Sector

Source: PIB
GS III: Agriculture – Storage, Transport and Marketing of Agricultural Produce and Issues and Related Constraints

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Why in the News?

The Ministry of Cooperation highlighted the progress of the Decentralised Grain Storage Plan in Cooperative Sector, launched as a pilot in 2023.

News in Brief

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• The Plan aims to strengthen storage, processing, procurement and distribution of foodgrains through Primary Agricultural Credit Societies (PACS).
• It converges schemes such as AIF, AMI, SMAM and PMFME to create integrated agricultural infrastructure at the PACS level.
• As of July 2026, 313 PACS had completed godown construction, creating more than 1.80 LMT of storage capacity.

Need for Decentralized Grain Storage

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• India’s grain storage system includes traditional storage practices, local facilities, warehouses and modern silos.
• While these systems have helped preserve foodgrains, the steady rise in agricultural production and the scale of India’s food security requirements have increased the need for storage facilities closer to farms and production centres.
• According to the Third Advance Estimates for 2025-26, India’s foodgrain production is estimated at 376.563 million tonnes, an increase of about 18.8 million tonnes (5.3%) over the previous year.
• At the same time, the National Food Security Act, 2013 covers around 80 crore people, making adequate and efficient grain storage an important part of food security.
• Centralised storage facilities operated by the Food Corporation of India (FCI) and State agencies continue to play an important role.
• However, decentralised storage can complement this system by bringing storage facilities closer to production centres.
• This can help reduce transportation costs, minimise wastage and improve the efficiency of foodgrain procurement and distribution.
• Against this backdrop, the Decentralised Grain Storage Plan in Cooperative Sector was launched as a pilot project on 31 May 2023.
• Implemented through the cooperative framework, the Plan aims to:
  • reduce foodgrain wastage and strengthen food security;
  • help farmers store their produce and avoid distress sales;
  • reduce transportation costs between procurement centres,
  • warehouses and Fair Price Shops;
  • expand the role of Primary Agricultural Credit Societies (PACS) by diversifying their activities; and
  • create additional income opportunities for farmers and rural cooperatives.

Integrated Infrastructure through PACS

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• The Decentralised Grain Storage Plan aims to develop integrated agricultural infrastructure at the PACS level by bringing together several existing government schemes.
• Instead of limiting PACS to their traditional credit-related functions, the Plan seeks to make them local centres for storage, processing, procurement and other agricultural services.
• The Plan brings together the following schemes,
  • Agriculture Infrastructure Fund (AIF) scheme – Provides financing and interest subvention support for the creation and upgradation of post-harvest infrastructure.
  • Agricultural Marketing Infrastructure scheme (AMI) – Provides back-ended capital subsidy for the construction of foodgrain storage facilities.
  • Sub Mission on Agricultural Mechanization (SMAM) – Facilitates the establishment of Custom Hiring Centres and access to agricultural machinery.
  • Pradhan Mantri Formalisation of Micro Food Processing Enterprises scheme (PMFME) – Promotes the formalisation and growth of micro food processing units.
• This convergence allows PACS to provide multiple services at the local level and can strengthen agricultural value chains and farmers’ income.

Key facilities and services under the plan,

• Custom Hiring Centres enable PACS to procure agricultural machinery for rental to farmers. Equipment may include tractors, harvesters, tillers, and other farm machinery.
• Fair Price Shops facilitate grain distribution and the sale of processed food products within local communities.
• Primary processing units undertake processing activities such as grain cleaning, sorting, and drying, thereby improving the quality and marketability of the produce.
• Procurement centres support grain procurement by PACS for State Agencies and FCI.
• The Plan provides for silo-based storage infrastructure of 50 metric tonnes (MT), 100 MT, and 200 MT capacities under the cooperative storage model.

Selection of PACS and Institutional Framework

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• The participating PACS are selected based on local storage requirements.
• Under the “Margdarshika” (Standard Operating Procedure), the District Cooperative Development Committees (DCDCs) identify and approve eligible PACS.
• The Plan also specifies conditions relating to land.
• PACS should preferably have their own land, and the site should not be waterlogged or located in a forest area.
• The consent of PACS members is required for using the land. Where leased land is used, the lease period should exceed 20 years.

Implementation Mechanism

• The National Cooperative Development Corporation (NCDC) is the implementing agency.
• The Plan uses a multi-level coordination mechanism involving institutions at the national, state and district levels.
  • Inter-Ministerial Committee (IMC): Overall monitoring at the national level.
  • National Level Coordination Committee (NLCC): Coordinates operations among participating institutions.
  • State Cooperative Development Committees (SCDCs): Support implementation at the state level.
  • District Cooperative Development Committees (DCDCs): Facilitate implementation and coordination at the district level.

Financial Support for PACS

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• The Government has introduced financial measures to make storage projects more viable for PACS.
• The AMI subsidy has been increased from 25% to 33.3%, while the margin money requirement has been reduced from 20% to 10%.
• PACS can also benefit from NABARD’s refinance support and the 3% interest subvention under AIF, bringing the effective loan interest rate down to 1%.
• FCI’s provision for assured hiring of eligible godowns further improves the viability of these projects.

Implementation Progress

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• The Plan follows a phased approach, starting with pilot projects and gradually expanding across the country.
• The initial projects helped demonstrate the feasibility of developing decentralised storage facilities through cooperatives and provided a foundation for wider implementation.
• The initiative has since expanded, with more PACS and cooperative societies being brought under the Plan and additional godowns being constructed.
• This gradual expansion reflects the growing focus on strengthening local storage capacity and agricultural infrastructure through the cooperative network.

Cooperative Storage in practice

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• Nerpingalai PACS in Amravati, Maharashtra, has established a warehouse under the Plan with support from the AMI and AIF schemes.
• NABARD refinance helped bring the effective loan interest rate down to 1%.
• The facility allows farmers to store their soybean produce and access advances against it, helping them meet immediate financial needs and avoid distress sales.
• The warehouse also provides an additional source of income for the cooperative and creates local employment opportunities.

Quality Standards and Transparency

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• The Plan follows common branding and quality standards for storage facilities to ensure consistency and public awareness.
• The Plan provides uniform branding guidelines for storage infrastructure created under the scheme.
• Each storage structure must display the approved grain storage logo and the prescribed colour scheme.
• The objective is to create a recognizable identity for the initiative and strengthen awareness among stakeholders.
• The warehouses are required to follow Warehousing Development and Regulatory Authority (WDRA) norms, use suitable and durable materials, and have proper ventilation to maintain grain quality.
• Regular inspections and quality audits are required to ensure compliance with design specifications and safety standards.
• PACS members are expected to monitor project progress, while Project Management Consultants (PMC) share updates on construction activities and expenditure to enhance transparency and accountability under the implementation approach.

Conclusion

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The Decentralized Grain Storage Plan in Cooperative Sector represents an integrated approach towards improving agricultural infrastructure through cooperatives. By linking storage, processing, procurement, and distribution at the PACS level, the Plan strengthens food grain management closer to production centres.

The framework reflects a cooperative-led approach towards strengthening decentralized agricultural infrastructure and long-term foodgrain management systems in the country.

UPSC Prelims and Mains Practice Question

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Consider the following statements regarding the Decentralised Grain Storage Plan in Cooperative Sector:

1. The Plan seeks to create integrated agricultural infrastructure at the PACS level.
2. NCDC is the implementing agency for the Plan.
3. The Plan operates exclusively through the Agriculture Infrastructure Fund and does not involve other schemes.

Which of the statements given above is/are correct?

A. 1 and 2 only
B. 2 and 3 only
C. 1 and 3 only
D. 1, 2 and 3

Answer: A. 1 and 2 only

Mains Practice Question

Q. Discuss the significance of decentralized grain storage infrastructure in strengthening India’s agricultural sector and food security. ( 150 words)

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