Posted by: Pradeep | May 30, 2008

Packaging and Handling of Food Grains in India

India currently is facing dual challenges of food security and rising inflation. Escalating food prices is one of the toughest challenges facing the Government. While production of food grains can be significantly enhanced with adoption of advanced farming technologies, substantial improvements in current supply can be achieved with efficient packaging, storing and handling systems. Efficient packaging can make a significant difference in the massive quantity of food grains India loses in the supply chain every year. The post harvest wastage in India for instance, is estimated to be as high as 26 per cent. This figure is just two per cent in the developed countries.

Currently, food grains and sugar are packed in jute sacks as required by an act of Parliament. The Jute Packaging Materials Act, 1987 (JPMA), which makes jute packaging mandatory for food grains and sugar, compels producers to use jute sacks despite abundant availability of a more cost-effective and superior alternative – synthetic woven sacks. It is universally acknowledged that synthetic sacks have multiple advantages besides being cost effective.

Except for India and to some extent Bangladesh, all other countries in the world use synthetic sacks for packing of food grains. Field trials and studies by premier institutes in India have conclusively proved superior performance of synthetic sacks as shown in the following table. It costs almost half the price of jute sacks.

This act was introduced in 1987 as a temporary measure with a view to provide relief to jute sectors for the benefit of jute mill workers and farmers. At the time of introduction, the act was contemplated to be phased out by 1994, but it continues even today, imposing high costs on consumers in terms of higher cost of packing materials and to the Indian economy in terms of massive loss of food grains due to wastages during, storage, handling and transportation in jute bags.

The key reason for the enactment of JPMA was safeguarding the interests of jute farmers and jute mill workers. However, studies by reputed institutes in India have shown that neither jute farmers nor jute mill workers have benefited from JPMA.

While volume of commodities requiring bulk packaging including food grains and sugar has gone up significantly, production of both raw jute and jute sacking has not increased commensurately. This in turn has reflected in India’s increasing imports of raw jute. The current level of raw jute import is ~10 per cent of India’s requirements, coming mostly from Bangladesh with significant volume of jute goods also reportedly entering the country through illegal channels. As a result, domestic food grains and sugar producers often suffer on account of frequent disruption in supply and shortages of jute sacks. Consumers are compelled to pay higher prices for jute sacks to comply with reservation norms under the JPMA.

Every year, large quantities of food grain are lost due to contamination, insects, rodents and moisture. A report by Mckinsey & Co. estimated wastage of agricultural produce in India to be around 40% of total production. While the losses are more pronounced for horticultural products, it is quite substantial for food grains like staples, pulses and oil seeds as well. Considering the present crisis wherein the country is facing a monumental task of addressing issues of food shortage and inflation, allowing producers and consumers a choice of adopting a more efficient packaging system can go a long way in providing long-term solution to food wastage and help enhance India’s food security.

It is unfortunate that twenty years since its enactment, the act has accomplished precious little to meet its objective of safeguarding interests of jute farmers or jute mill workers. It is time for the policy makers to review the efficacy of the act objectively and allow Indian consumer to decide what is in their best interest. In the process, this could be a step further in bolstering the Indian economy.

CAN WE OVERLOOK THE GAINS?

Synthetic sacks are more cost-effective as compared to jute sacks. While a 50 kg jute sack for food grain costs Rs 22.50 per bag today, the same for a similar synthetic sack costs just Rs 14 per bag – a direct saving of Rs 8.50 per bag. Considering derived benefits of using plastic woven sacks in reducing wastages that otherwise occur in storage, handling and transportation of food grains in jute bags, the amount could be substantial, and total savings would be close to 15-20 per cent depending on the retail prices of commodities packed. This would surely provide a big boost in India’s efforts to control inflation.

Colossal Losses – can we afford this wastage?

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