warehousing final report

8/3/2019 Warehousing Final Report

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AGRICULTURAL CREDIT

AND MARKETING

Project Report on:

Warehousing Facilities foragricultural produce

By:

Am it Roy (2006) Am it Kum ar (2007) A nkit Jaiswal (2008) A nuradha Pawar (2009) A rchit Bansal (2010) Yashi Tandon (2043)


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WAREHOUSING

INTRODUCTION:-

Warehousing is one of the functions of marketing. The place where the goods are stored is called

as warehouse. The term ware means products. Storage or godown is generally located near the

factory to keep the raw material and finished products. Storage is only a holding place. Whereas,

the warehouse is located near the market to perform the other marketing functions such as

grading, standardization, blending, mixing, packing etc. Therefore, we may say that a warehouseholds goods as a distribution center. The development of science and technology has improved

the ways and means of storage.

MEANING OF WAREHOUSING:-

It is an arrangement by which goods are stored when they are not immediately needed and are

kept in such a manner to protect from deterioration. It can be simply called as a place where the

storage facilities are provided. The object of warehousing is preservation and protection of goods

from deterioration in quantity and quality. It creates time utility.


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K INDS OF WAREHOUSES:-

O n the basis of ownership warehouses can be classified into the following types :-

1. Private

2. Public3. Co-operative

O ther warehouses can be classified into the following types :-

1. Bonded

2. General merchandise

3. Special commodity

4. Cold storage

5. Climate controlled warehouses

6. Distribution centers

7. Automated warehouses

1. Private Warehouse:

These are owned by private persons to store their own products. Large scale manufactures,

wholesalers, and bid stockiest have their own warehouses at different distributing centers in

order to maintain the regular supply of goods with dealers and others. All expenses and risk

involved in storing the goods are borne by them. O nly the large and steady sales volume holders

find it economical in maintaining such warehouses.

2. Public Warehouse:

These are started to provide storage services and facilities to the retailers, wholesalers, and

stockiest and even to the general public. These warehouses impose rental charges for the space

used and service charges for providing services such as inspection of goods, packing them,shipping and invoicing them. These are constructed at strategic places where rail and road

transportations are available.


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3 . Co-operative warehouse:

These are organized to provide warehousing facilities to members and others. The interested

persons who would become the members of such societies form these. Its efficiency depends

upon the full utilization of space, self-less management, loyalty of all the members and

resources.

4 . Bonded warehouse:

These types of warehouses are licensed by the government and are permitted to accept the goods

under bond . The imported goods awaiting clearance are kept in the warehouse till the duty is

paid. The goods will be delivered only after payment of the duty. These types of warehouses are

situated near the ports . If the government owns the bonded warehouses then customs authorities

will have direct control over the warehouses. The owners of the goods are allowed to inspect, bottle, brand and blend the goods.

5. General merchandise warehouse:

These are the most common type of warehouses which provide storage facility for any product

which does not require special facility. They are simply resting places and can be used by the

manufactures, wholesalers and retailers.

6. Special commodity warehouse:

These warehouses are specially constructed for the storage of a particular commodity such as

tobacco, cotton, wool etc,

7. Cold storages:

Some of the products are to be stored in cold storages, which uses the technique of refrigeration

to extend the period of marketing. For example: Perishables such as fruits, vegetables, fish, and

meat and eggs etc., are stored for future consumption.


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8 . Automated warehouses:

With advances in computer and robotics technology many warehouses now have automated

capabilities. The level of automation ranges from a small conveyor belt transporting products in

a small area all the way up to a fully automated facility where only a few people are needed to

handle storage activity for thousands of pounds/kilograms of product. In fact, many warehouses

use machines to handle nearly all physical distribution activities such as moving product-filled

pallets (i.e., platforms that hold large amounts of product) around buildings that may be several

stories tall and the length of two or more football fields.

9 . Climate-Controlled Warehouse:

Warehouses handle storage of many types of products including those that need special handling

conditions such as freezers for storing frozen products, humidity-controlled environments for

delicate products, such as produce or flowers, and dirt-free facilities for handling highly sensitive

computer products.

10. Distribution Center:

There are some warehouses where product storage is considered a very temporary activity.

These warehouses serve as points in the distribution system at which products are received frommany suppliers and quickly shipped out to many customers. In some cases, such as with

distribution centers handling perishable food (e.g., produce), most of the product enters in the

early morning and is distributed by the end of the day.


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thereby making them available easily to wholesalers, retailers and other dealers. In turn they will

be sold to the ultimate consumers.

6. Storage of Raw materials for mass production:

Some raw materials are to be made readily available to facilitate continuous mass production.

Therefore, such types of materials are kept in warehouses to be supplied to the production center

as and when required. For example raw cotton is purchased from the markets and warehoused for

supplying the same to the production place.

7. Storage to keep buffer stocks:

To avoid interruption in production and to avoid the danger of non-availability of commodities,

certain minimum stock is to be stored. Therefore, storage is essential.

8 . Storage for speculative purposes:

Certain commodities are kept in the godown for some time to get better prices for them. These

are stored to get profit out of fluctuations in prices, till such time the goods are to be kept in the

godown.


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FUNCTIONS OF WAREHOUSING:-

It renders invaluable services to the community by performing the following functions:

1. Protection of Goods:

Warehousing saves the goods from deterioration by storing in suitable racks, cans, drums, bags

and by keeping them away from sun, dust and rain. Thus the warehousing safeguards the goods

from various agents of harms both natural and human. Making safety and security arrangements

make pilferage and theft difficult. Fire protection devices are also kept ready to protect the goods

from fire.

2. Price stabilization:

Warehousing ensures the steady supply of goods as and when demanded. Thus it helps in

stabilization of prices. In the absence of warehousing, smooth flow of goods are difficult and are

also unremunerative both to producers and dealers due to heavy price fluctuations. Thus

warehousing provides a cushion to absorb the market fluctuations and supplies the goods at more

or less uniform prices throughout the year.

3 . Storage of goods:

There is a gap between the period of production and the period of consumption and also between

the quantity produced and quantity consumed. The surplus goods are stored properly for the

purpose of supplying them at a place and time at which it is needed.

4 . Equalization of demand and Supply:

The commodities not in demand in the market are withdrawn from the market and are stored and

afterwards they are pumped into the market when they are required. Consumers can get the

commodities regularly even during the off-season periods. To avoid famines and scarcity of

goods, the government also warehouses the food grains through effective warehousing

programmes.


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5. Facilitating Business Finance:

Based on the goods deposited in a warehouse, the depositor can get finance by showing the

receipt issued by the warehouse keeper from banks and other financial institutions.

6. Preparation for sale:

Now a days modern warehouses undertake the functions of sorting, packing and labeling for the

purpose of making the goods suitable for marketing. Hence, the warehousing is needed for

making the goods suitable for marketing which inturn results in the sale of products.

7. Delivery to the buyer:

The goods sold need not be brought to place of buyer by taking physical delivery .The depositor

can make the transfer of goods by simply issuing delivery orders to the warehouse-keeper by

mentioning the name of the buyer.

8 . Widening the marketing area:

A manufacturer can sell the goods to different marketing areas by establishing branch

warehouses or taking the services of rented warehouses at the required places.

9 . Concentration on production:

Producers are relieved from the problem of storing the goods. They need not have separate

storage place of their own. The warehouse keepers give all these special services. Therefore the

producers can concentrate on production.

10. Risk bearing:

O nce the goods have been kept in the warehouse it is the responsibility of the owner of the

owner to keep the goods in good condition. thus the risk on the farmer is minimized and he is

sure to get a minimum amount of profit.

11. Grading and Branding: especially in the agricultural products a lot of varities are available,

hence a warehouse provides the ideal place as all the produce can be soughted and priced

accordingly and then sent to different markets according to their demand, thus increasing the

efficiency of the market. Grading and branding also make things a lot more easier for the

consumers as every time he does not have to sought out the things himself, thus saving times.


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IMPORTANCE OF WAREHOUSING:-

1. Warehousing safeguards the stock of the merchant, who has very limited trading place.

2. Warehouses reduce distribution cost by unloading the goods in bulk and facilitates the trader

to move the goods in small lots to his shop.

3 . Warehouses near the selling area serves the customer at a lower cost.

4 . Some warehouses provide indirect financial assistances. For e.g. bonded warehouses provide

facilities to release the goods proportionately after getting the dues in installments.

5. Warehouses stabilize the prices of the goods by effecting the movement of the goods.

6. It helps in determining the channel of distribution. For e.g. Manufacturer will prefer to have a

wholesaler or retailer who has his own warehouse .

7. It assists in maintaining the continuous sales and avoids the possibilities of out of stock

position.

8 . Warehouses help in imports and exports of goods as it stores it in large amount and also has

many facilities like convenient location, good transportation facility and all the things mentioned

above.

9 . Food security: it is only because of good storing facility that India has been able to reach the

stage of food sufficiency, it no longer has to import grains from other countries. Also the farmers

no longer have to sell their produce at throw away prices.


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WAREHOUSING IN INDIA:-

India is an agrarian country but the importance of warehousing was not felt till 1950. The Pause

Committee has estimated that post harvest losses are more than 10% of the food grains produced

due to poor warehousing facilities. O n the recommendation of the All India Rural Credit SurveyCommittee, The Agricultural Produce (Development and Warehousing) Corporations Act

enacted in 1956 authorized the government to set up National Co-operative Development and

Warehousing Board to develop agricultural Co-operatives and warehousing. The Central

warehousing Corporation was established in 1957.This Act also permitted the establishment of

State Warehousing Corporations.

The three main agencies in the public sector engaged in providing large scale warehousing

facilities are:

1. Food Corporation of India (FCI):

It provides storage facilities for food grains. FCI also hires storage capacity from other sources

such as CWC, SWC, State Governments and private parities. The available storage capacity of

Food Corporation of India in the seventh plan is 20.33 million tonnes.

FCI developed an indigenous m ethod for storing the agriculture- produce called Cover and

Plinth (C A P). CA P storage is a ter m given to storage of foodgrains in the open with adequate

precautions such as rat and da m p proof plinths, use of Dunn age and covering of stacks with

specially fabricated polythene covers etc.

In order to reduce storage and transit losses of food grains and to bring additional resources

through Private Sectors participations. Govt. of India had announced a National Policy on

Handling Storage and Transportation of Food grains in June, 2004 for Bulk and conventional

godowns. In the Ist phase,after a series of deliberations, it was approved that total capacity of

lakhs MT be created at the identified based depots and feild depots through private sector

participation on Build-Own & Operate (BOO) Basis.


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5. To act as the agents of the government towards the purchase, sale, storage and distribution of

specified commodities and transport to and from the warehouse.

6. To construct warehouses at suitable places to store different commodities on scientific lines.

3 . State Warehousing Corporation:

Every state government is given power to establish its own Warehousing Corporation after

getting approval from the Central Warehousing Corporation.50%of the capital is contributed by

the CWC and the State Government contributes the balance 50%..The available storage capacity

of SWC in the seventh plan is 9.70 million tonnes.

Functions of SWC:

The following are the functions of SWC:

1. To start and run the warehouses at places not reserved for the central warehouses

2. To regulate the markets at its specified centers.

3. To act as an agent of the Government and CWC.

4. To subscribe the share capital of co-operative warehousing societies.


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WAREHOUSING - A REGIONAL COMPARISON:-

The concept of Modern Warehousing was evolved more than 45 years ago on the recommendation

of the Rural Credit Survey Committee set up by the Reserve Bank of India in the year 1951 with the

twin objective of providing scientific storage for preservation of Agricultural produce ad expansion

of credit facility through Commercial banks in the rural areas to prevent the farmers from distress

sale and also to provide them with inputs in the shape of seeds, fertilizers and agricultural

implements. O n the recommendations of the Rural Credit Survey Committee, the Agriculture

Produce Development and Warehousing Act 1956 came into existence.

The United Nations Development Projects Action March April 1975 stated that in India 10millions tones of grains are lost every year through spoilage by pest and moisture and these losses

could be make up for the entire annual world food storage. O n the other hand the adverse effects o

frequent fluctuations in the output of food grains following the vagaries of rain fall in the country

can be minimized to some extent through proper storage and distribution. The Warehousing

Corporation is a Corporate body, which was established on the basis of the Agriculture Produce

(Development and Warehousing) Corporation Act 1956, No 28 of 1956. This Act was later

repealed and a new Warehousing Corporation Act was enacted in1962.

We have learnt the importance of warehousing in the modern agriculture sector. India being an

agriculture economy has to really take care of its warehousing facilities. India is still not a developed

country and hence we still face an imbalance and all the states dont have the same facilities due to

their underdevelopment. Here we bring about a study of functioning and state of different

warehousing corporation in India. Every state in India has its own warehousing corporation who

takes care of the warehousing facilities but all of them are not of the same quality. They all differ to

each other. The graph below gives a clear picture of the difference between the different states

corporation:-


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The graph above shows different warehousing corporations in india and their working. In the graph

its clearly seen that all the states corporations are not of the same. There is a huge difference

between their functioning and quality. In the graph its Punjab and Assam who tops the chart and

states like Bihar and O rissa lacks behind.

Now lets have a look at the different state warehousing corporation in our country and their

functioning and reasons for their failure or success. I have taken 5 states Bihar, O rissa, Karnataka,

Kerala, and Tamil Nadu. O f this Bihar is an example of worst hit case and Karnataka is the example

of case with the best results.


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BIHAR:-

The corporation was set up for the purpose of storage of food grains and other notified agricultural

commodities by constructing scientific Godown throughout the state to help farmers by way o

providing them storage facilities and agriculture inputs at their doorsteps. The Bihar StateWarehousing Corporation acts as an agent of the Government for the purpose of storage o

agriculture produce, inputs, seeds, manures, fertilizers, agriculture implements and other

commodities.

THE MISSI O N

- To promote Scientific Storage facilities for Food grains, Pulses, O ilseeds, Spices,

Sugar, Fertilizers, Manures and other notified commodities and providing safe

Warehousing where by losses due to spoilage can be minimized.

- To prevent distress sale through introduction of Warehouse receipt as a negotiable

Instrument.

BENEFITS O F WAREH O USING C O RP O RATI O N

Complete security of stocks, which is ensured by scientific prevention methods and

Techniques.

Insurance coverage for goods stored in warehouse Facility of bank advances against the security of warehouse deposits. Part delivery of goods, which enables the depositors to withdraw the goods according of his

needs and on part repayment of the bank loan, if taken against t he security of the goods.

A rebate of 10 % in the storage charges for stocks belonging to the Bonfide Agriculturists.


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The following chart depicts the status of business, capacity utilization and profitability during the

past five years

:

Projected profit growth


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Bihar state warehousing corporation is in worst of its state. The projected growth shows a very

bright future of the corporation but the reality is something different. Bihar warehousing corporation

is a complete failure. There are various reasons for its failure. The most important being the huge

amount of corruption in the state. The funds allotted generally dont reach to the purpose for which it

was allotted. This phenomenon is very common and people are no bothered to inspect it. The

authorities take an advantage of it and what happen to Bihar state warehousing corporation is in front

of us. Government too plated an important role for its failure. Their policies brought nothing but

more trouble for the corporation.

K ERALA:-

K erala State Warehousing Corporation came into existence on 20th February 1959

according to Government Notification No. Ag.P2 - 205057 AD dated.30.01.59. It functions

under the Warehousing Corporations Act 1962 (Central Act 58/1962). The Warehousing

Corporations Act 1962 was passed repealing the Agricultural Produce Development and

Warehousing Corporations Act 1956. KSWC is a statutory Corporation having 50% Share

Capital by Central Warehousing Corporation and 50% share capital by the Govt. of Kerala.

It has its Corporate O ffice at Ernakulum with 3 Zonal O ffices, 9 Regional O ffices and 60

Warehouses scattered all over the state.

All types of agricultural commodities and other commodities notified by the Government

from time to time are accepted for storage in a Warehouse. The idea behind the whole

warehousing scheme is to give scientific storage to the agricultural produce and also to

arrange easy credit and holding power to the agriculturists to enable them to get a better

price for their produces. A Warehouse Receipt incorporating the quantity, quality, market

value and particulars of insurance against fire, theft and burglary will be issued to the

depositor. The Warehouse Receipt is negotiable in nature and can be pledged in any bank.

The Kerala state warehousing corporation has done fairly well. Its neither too developed nor

a loss making or a sick one.


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PUNJAB:-

Punjab State Warehousing Corporation (PSWC) is the biggest State Warehousing Corporation of

India with a storage capacity of 62.50 lakh MTs, & a network of 117 warehouses, 251

Procurement Centres, and 5 Container Freight Stations (CFSs) / Inland Container Depots

(ICDs).

It not only accounts for more than 1/3rd of the total combined capacity available with all the

State Warehousing Corporations in the country put together, but is also the 2nd largest CFS

operator in the Northern India

Modern management practices, stringent financial control & strict administrative discipline has

made PSWC, the fastest growing State Public Sector Undertaking of India.

Its highly motivated work force of about 1756 employees have proved their worth as its

operating profits of Rs. 21.76 lakhs in 1992-93 zoomed to Rs. 3170.35 lakhs during the year

2004-05.

As one of the procuring agencies of the State Govt. since 1993-94, PSWC has not only been able

to achieve targets but also has been maintaining its impeccable record of rendering outstanding

services to the farmers by arranging prompt payments for their produce.

PSWC offers total solutions to agriculturists for their warehousing needs: Procurement,

Storage/Warehousing, and Containerization & Export of food grains.


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TAMIL NADU:-

A premier warehousing agency in the State of Tamilnadu was established in 1957. It provides

price support to the agricultural sector.

It is one of the biggest public warehouses operating in the state offering logistic services to a

diverse group of clients.

Tamilnadu Warehousing Corporation (TNWC) operates 65 warehouses across the state with a

storage capacity of 6.3 lakh tonnes providing warehousing services for a wide range of products

running from agricultural products to sophisticated industrial products.

Warehousing activities of Tamil Nadu Warehousing Corporation include food grain warehouseand custom bonded- warehouse. 3. Apart from storage and handling, Tamil Nadu Warehousing

Corporation also offers its services in the area of handling, transportation, disinfecting services,

fumigation services and other ancillary activities.

Tamil Nadu Warehousing Corporation also offers training on scientific storage of stocks to

different agencies.

Scientific storage and handling services are offered for more than 200 commodities that include

agricultural produce, industrial raw materials, finished goods and a variety of hygroscopic items.

Scientific storage facilities are available for more than 200 Commodities that include

hygroscopic items through 65 warehouses in Tamilnadu.

At present TNWC is functioning in Tamilnadu with seven Regional headquarters at

Kancheepuram, Cuddalore, Trichy, Salem, Dindigul, Mettupalayam and Tirunelveli.


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TENTH FIVE YEAR PLAN STRATEGY:-

The Government of India has approved a National Policy on Handling, Storage and

Transportation of Food grain. This policy broadly envisages:

(i) reduction in storage and transit losses at the farm level;

(ii) encouragement to farmers to adopt scientific storage methods;

(iii) modernization of the system of handling, storage and transportation of the food grains

procured by the FCI;

(iv) Harnessing the efforts and resources of both the public and private sector (including

foreign companies), to build and operate infrastructure for bulk handling, storage and

transportation of food grains.

Fiscal incentives are available to the entrepreneurs in the form of tax concessions on profits,

custom duty exemption for items not manufactured in India, etc. Horticulture crops are highly

perishable and improper handling can lead to heavy losses. The potato crop takes up 88 per cent

of the country's total cold storage capacity. O ther fruits and vegetables account for 10.4 per cent,

whereas fish and marine products account for 1 per cent of the total cold storage capacity. There

are 3,886 cold storages with an installed capacity of 13.62 metric tonnes and about 150 units arein the process of construction. Thus, by the end of the Ninth Plan the total cold storage capacity

was of the order of about 14.37 metric tonnes. There are very few multi-purpose cold storages.


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LIMITATIONS OF WAREHOUSING:-

The warehousing in India is not effective because of the following reasons:

1. Warehouses located are at longer distance from production centre. This is the main problem of

the warehouses in India. This disturbs the storage of food grain. In India there are some parts

where production of food grains is done on a large scale but the warehouses are not exactly near

by them to store the produce exactly after the produce. O verall due to this problem it also involve

huge transportation cost of food grains from production center to the warehouses.

2. 90% of the farmers are illiterate and are not able to know the benefits of storage and

institutional credit availability. In India there are many institutional and non institutional sourcesof finance are available but there are very few farmers only who take the advantage of these

sources. Since in many parts of the country the farmers are uneducated/illiterate they even dont

know about these things due to which they did not spend much on the storage of food grains

properly. The other reason is that there is no one to aware them how to use the warehouses for

proper storage or how to built a warehouse using credit available from the financial institutions.

3. The farmers marketable surplus is very small. Therefore they find that it is not worth to keep

the produce in the warehouses located at longer distances.

4. There are no proper transportation facilities between the place of production and warehouse.

5. Warehousing corporations are not providing storage facilities, which are suitable for different

commodities such as perishable and non- perishable commodities requiring different conditions.

6. More complicated formalities are to be fulfilled at the warehouses. The illiterate and innocent

farmers are not able to cope up with these procedures.

7. The cost of warehousing is more than the benefits.


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Conclusion

A ccording to infrastructure Develop m ent Finance Co m pany, India s econo m y has been growing

at a rapid rate, but it doesn t have the proper infrastructure to support its pace. The sa m e

im plies with the agricultural sector too. Though our agriculture produce is increasing post green

revolution, but the storage facility is still not adequate. A s per the researches every year 10% of

the agricultural produce by weight is da m aged due to the lack of proper warehousing facility.

Hence the need of the hour is to increase the storage facilities and m ore pro-active approach in

im ple m enting govern m ent policies, so every area and every crop is covered properly.


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REFERENCES

1.

Government of India (2001) -Report of the Working Group on Strengthening of Agricultural Infrastructure, Warehousing, Rural Godowns, Markets etc.

2. Five Year Plan, Panning Commission, Govt. of India, New Delhi.

3. Government of India (2003) Report on Agmark Grading Statistics 2001-02,

4. Directorate of Warehousing & Inspection, Ministry of Agriculture

5. Wikipedia

6.

www.agmarknet.org

7. www.fci.com

8. www.agricoop.in.org

9. Book reference-Globalization and Agricultural Marketing ,edited by Harish Nayyar and P. Ramaswamy

warehousing final report

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