NCML to hand over rice silos to FCI by end of FY23

National Commodity Management Services Limited (NCML) will be handing over two rice silos to the Food Corporation of India (FCI) by the end of the current fiscal at Kaimur and Buxar in Bihar, NCML Managing Director and CEO Sanjay Gupta has said.

Besides these rice silos, NCML will hand over seven of the 10 wheat silos before the end of the current fiscal and the remaining next fiscal. NCML, which is now owned by Fairfax company, is considering constructing more silos or warehouses for maize (corn) particularly with the Centre keen on the success of the National Biofuel Policy. 

“Both the rice silos are a pilot project of 12,500 tonnes capacity each. FCI has a large price procurement programme and it stores rice in horizontal storage. If this (pilot) works out, it will be a huge saving since storage loss in rice is very high,”

In both these places, the silo complex will have 50,000 tonnes capacity with wheat making up the remaining 37,500 tonnes. 

Peculiar problem

Rice has a peculiar problem when stored. It, particularly, loses 3-4 per cent weight during storage and storing it in silos can help solve the problem to a large extent. “But we will be able to see if there is any saving when we begin the first storage. Hopefully, by the end of next year, we will have that data,” he said.

The design for a rice silo is different from the one for wheat to minimise any loss. “The biggest challenge is that you have to design the silo in a way if you just stack one on top of the other, then there could be breakage. And in the silo, the grains that are being poured hit the floor at a high speed. Breakage can happen then too,” Gupta said on the problems they need to overcome to preserve the cereal’s quality.  

NCML may even store old rice stock from one of its warehouses to test the silo’s capability. “We can do it in March-April itself because that is peak summer time. Then we will get to know the moisture loss due to the heat. The process is you have to fill and then empty it to determine the weight loss. But we are very hopeful about the way the silo has been designed. The loss will be minimised,” he said.

Other advantage

The other advantage of the silo pilot project in Kaimur and Buxar is that both are rice-producing and consuming centres. “Based on the results of the pilot project, the Centre may roll such silos across the country,” the NCML MD and CEO said. 

The construction of silos for wheat and rice got delayed due to the Covid pandemic and subsequent supply chain disruption. “We have behind schedule but we are very hopeful that we will catch up in a year or so,” he said, adding that this was because the silos had to be imported. 

The silos, designed to minimise moisture loss, are expected to arrive by  January and they will be set up in 2-3 months. NCML hopes the Centre might do away with horizontal or warehouse storage in favour of silos. “Logistically, it makes sense. Shifting large quantities of commodities by rail is always better. Once you have these silos and you have the designed racks for this. The operation costs come down significantly,” Gupta said. 

The Centre has already come out with the second phase of setting up silos and it will likely come out with another one too with the process of conversion of horizontal storage to silos continuing for the next 4-5 years, he said, adding that it will take 5-6 years for the total transition. 

Biofuel policy boost

NCML sees maize getting traction in the country in view of the National Biofuel Policy, necessitating the need to set up silos for the coarse grain. “We believe that maize production will increase sharply in the coming years as its daily demand is increasing for poultry feed, industry, particularly starch and biofuel. It could gain at the cost of other crops,” the NCML chief said.  

The company has set up its own maize silos in Purnia, Bihar, with a capacity to store 24,000 tonnes. “Maize is highly amenable to silo storage in view of moisture loss and silos can prevent such a loss. It can protect the grain from other problems such as aflatoxin,” he said. 

“We are bullish on maize. In fact, we are evaluating putting up either more silos or warehouses in Bihar, which produces maize during the rabi season which is of good quality,” Gupta said.

NCML, which has 800 warehouses with it handling 1.5 million tonnes of commodities a year, is focussing on 4-5 major verticals for corporate houses. “Name any large corporate house and they are with us. They are working with us in one way or the other.

 NCML, launched in 2004, has gone through a cycle with 2017-18 becoming a defining year after demonetisation and commodity price crash affecting its  collateral management and supply chain businesses.  Now, they are no more the focus areas for the company. 

Current focus

“Right now, our focus is on 2-3 key things. First, of course, is storage and preservation business, which remains the bread and butter of the company. Then, we have a testing and certification wing. After 2019, we expanded it a lot

and we have nine labs, all accredited by NABL across the country,” he said. 

NCML has also scaled up its consultancy business, including Agcon or agriculture consultancy. “We provide data to insurance companies by way of automatic registrations. We also have a project running not only in India but abroad too like Dominica under a World Bank project,” the NCML chief said.  

The company is into non-banking finance through its arm funding agriculture commodities. NCML hopes that offering commodities as collateral to raise funds will be revived soon as it is an easy source of funding for farmers. The company plans to double its warehousing solutions business this year, Gupta said. 

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